SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ... ·...

SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

1 SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

STATEMENT OF FINANCIAL POSITION

(in Euro) NOTES 31 December 2014 31 December 2013

ASSETS NON-‐CURRENT ASSETS Property, plant and equipment 4 10,932,886 13,578,978 Property, plant and equipment under lease 4 252,836 360,277 Goodwill 5-‐6 293,238,288 288,649,098 Other intangible assets 5 21,687,706 22,977,227 Investments in Subsidiaries, Joint-‐ventures, Associates 7 145,230,804 154,892,627 Other investments 8 2,718,066 2,503,642 Non-‐current financial assets 9 66,963,521 59,567,578 Other receivables and non-‐current assets 10 1,428,729 1,274,692 Deferred tax assets 34 18,662,389 13,269,611 TOTAL NON-‐CURRENT ASSETS 561,115,225 557,073,730 CURRENT ASSETS Inventories 11 1,172,481 1,514,317 Trade receivables and advances to suppliers 12 436,043,746 521,079,592 Current tax receivables 20,938,898 9,132,786 Other current assets 13 19,870,027 19,418,860 Current financial assets 14 38,129,096 96,535,423 Cash and cash equivalents 15 92,641,328 149,834,497 TOTAL CURRENT ASSETS 608,795,577 797,515,475 Assets classified as held for sale 0 660,000 TOTAL ASSETS CLASSIFIED AS HELD FOR SALE 0 660,000 TOTAL ASSETS 1,169,910,801 1,355,249,205 SHAREHOLDERS’ EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY Share capital 109,149,600 109,149,600 Share premium reserve 145,018,390 145,018,390 Reserves 71,450,926 66,763,965 Retained earnings 3,808,981 3,808,981 Profit/(Loss) for the year 12,932,435 5,349,758 TOTAL SHAREHOLDERS’ EQUITY 16 342,360,333 330,090,695 NON-‐CURRENT LIABILITIES Employee termination indemnity 17 12,352,714 14,161,860 Long-‐term provisions for risks and charges 18 7,498,697 7,300,954 Long-‐term debt 19 370,279,645 439,992,534 Deferred tax liabilities 34 10,367,315 9,502,883 TOTAL NON-‐CURRENT LIABILITIES 400,498,371 470,958,230 CURRENT LIABILITIES Short-‐term provision for risks and charges 18 16,455,026 14,571,939 Trade payables and advances from customers 20 267,893,323 331,718,400 Other current liabilities 21 98,292,750 112,407,243 Bank borrowings, including current portion of long-‐term debt, and other financial liabilities

19 44,410,999 95,502,698

TOTAL CURRENT LIABILITIES 427,052,098 554,200,281 Liabilities attributable to assets classified as held for sale TOTAL LIABILITIES ATTRIBUTABLE TO ASSETS CLASSIFIED AS HELD FOR SALE TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 1,169,910,801 1,355,249,205


STATEMENT OF PROFIT OR LOSS

(in Euro) 31 December 2014

31 December 2013

REVENUES Revenue from sales and services 22 727,834,212 784,587,530 Other revenue 23 3,308,281 2,274,484 TOTAL REVENUE 731,142,493 786,862,014 OPERATING COSTS Costs of raw materials and consumables 24 (104,247,754) (125,555,533) Costs for services and use of third party assets 25 (265,994,514) (288,086,420) Personnel costs 26 (312,570,796) (302,607,169) Other operating costs 27 (5,742,298) (5,899,852) (Amortization, impairment losses) – write-‐backs of assets 28 (12,037,523) (24,676,398) (Accrual of provisions for risks and charges) (5,783,976) (6,322,503) TOTAL OPERATING COSTS (706,376,861) (753,147,875) OPERATING INCOME 24,765,632 33,714,139 FINANCIAL INCOME AND EXPENSES Dividend and income (loss) from sale of investments 29 12,619,311 13,041,638 Financial income 30 13,912,076 6,874,656 Financial charges 31 (42,512,092) (30,849,949) Gains / (losses) on exchange rate 5,501 (1,180) PROFIT (LOSS) BEFORE TAXES 8,790,428 22,779,304 Income taxes 33-‐34 (3,443,113) (17,429,546) PROFIT (LOSS) FROM CONTINUING OPERATIONS 5,347,315 5,349,758 Profit (loss) from discontinued operations 32 7,585,120 NET PROFIT (LOSS) FOR THE PERIOD 12,932,435 5,349,758


STATEMENT OF OTHER COMPREHENSIVE INCOME (*)

(in Euro) 31 December 2014 31 December 2013

Profit/(Loss) for the year 12,932,435 5,349,758 Other components of the comprehensive income, which will be subsequently reclassified under profit/loss for the year

Gain/(loss) on Cash Flow Hedge 0 1,222,067 Income taxes 0 (336,068) Net effect on gains (Losses) of cash flow hedge 0 885,998 Total other components of the comprehensive income, which will be subsequently reclassified under profit/loss for the year, net of taxes

0 885,998

Other components of the comprehensive income, which will not be subsequently reclassified under profit/loss for the year

Actuarial gains (losses) on defined benefit plans (914,203) 504,347 Income taxes 251,406 (138,695) Net effect of actuarial gains/(Losses) (662,797) 365,652 Total other components of the comprehensive income, which will not be subsequently reclassified under profit/loss for the year, net of taxes

Total other components of the comprehensive income, net of taxes (662,797) 1,251,650 TOTAL COMPREHENSIVE INCOME (LOSS), NET OF TAXES 12,269,638 6,601,409


STATEMENT OF CASH FLOW

(In thousands of Euro) 31 December 2014 31 December 2013

Net profit (loss) from continuing operations for the period 5,347 5,350 Income taxes for the year 3,443 17,430 Profit before taxes 8,790 22,779 Amortization, depreciation, write-‐downs and (write-‐backs) of assets 12,038 24,676 Accrual (reversal) of provisions for risks and charges 5,784 6,323 Employee termination indemnity provision 448 434 Payments of employee termination indemnity (3,171) (1,765) Utilization of provisions for risks and charges (3,703) (3,321) Financial charges (income) 28,595 23,976 Cash flow from current operations 48,780 73,102 Decrease (increase) of inventories 342 710 Decrease (increase) of trade receivables and advances to suppliers 89,169 (10,153) Decrease (increase) of other current assets (605) (8,398) Increase (decrease) of trade payables and advances from customers (63,823) 8,347 Increase (decrease) of other current liabilities (14,114) 2,333 Change in working capital 10,968 (7,161) Net interest paid in the year (17,089) (23,219) Income tax paid in the year (19,528) (15,060) Net cash flow from operating activities 23,131 27,663 (Purchase of intangible assets) (8,920) (8,630) (Purchase of property, plant and equipment) (998) (906) Proceeds from sales of property, plant and equipment 499 14 (Disposal of investments) 12,460 171 Net (Decrease) increase of financial assets 51,589 (50,588) Change in goodwill (4,589) 0 Net cash used in business combinations 414 Net cash used in discontinued operations 8,245 (660) Net cash flow used in investing activities 58,287 (60,185) Net proceeds from/(reimburse of) financial liabilities (138,613) 152,520 Dividends paid Change in share capital and reserves Net cash flow from (used in) financing activities (138,613) 152,520 Changes in cash and cash equivalents (57,193) 119,999 Cash and cash equivalents at the beginning of the period 149,834 29,836 Changes in cash and cash equivalents (57,193) 119,999 Cash and cash equivalents at the end of the period 92,642 149,835 Details of cash and cash equivalents Current bank accounts -‐ assets 92,641 149,834 Current bank accounts -‐ liabilities Total cash and cash equivalents 92,641 149,834


SUPPLEMENTARY INFORMATION

(in thousands of Euro) 31 December 2014 31 December 2013

Interest paid (24,705) (29,921) Interest received 7,617 6,702 Dividends received 11,736 13,042

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands of Euro) Share capital

Share premium reserve

Reserves Retained Earnings

Result of the year

Total Shareholders’

Equity

At 31 December 2012 109,150 145,018 39,345 3,809 26,246 323,567 2012 Allocation profits 0 0 26,246 (26,246) 0 Total comprehensive profit/(loss) for the year 0 0 1,252 0 5,350 6,602 Other transactions (78) (78) At 31 December 2013 109,150 145,018 66,764 3,809 5,350 330,091 2013 Allocation of profits 0 0 5,350 (5,350) 0 Total comprehensive profit/(loss) for the year 0 0 (663) 0 12,932 12,269 At 31 December 2014 109,150 145,018 71,451 3,809 12,932 342,360


EXPLANATORY NOTES

1. GENERAL INFORMATION

Manutencoop Facility Management S.p.A. (the Company or MFM) is an Italian joint-‐stock company with

registered office in Via U. Poli no. 4 -‐ Zola Predosa (BO).

On 1 July 2013 new agreements were executed between Manutencoop Società Cooperativa (Parent

Company of MFM S.p.A.) and the investment funds that hold minority interests in MFM S.p.A., replacing

the previous Investment Agreement signed in December 2008. On the same date the minority

shareholders transferred, on a pro-‐rata basis, 7,671,580 shares of MFM S.p.A. (representing 7.0285% of its

share capital) to Manutencoop Società Cooperativa. The shares were transferred with retention of title

(“riserva di proprietà”) pursuant to and for the purposes of article 1523 of the Italian Civil Code: therefore,

Manutencoop Cooperativa may only exercise financial and administrative rights over them (including, but

not limited to, voting rights at shareholders’ meetings). The final transfer of the shares is expected to take

place when their contractually agreed price has been paid within 3 years, i.e. on 1 July 2016.

The Company is 71.89% owned by Manutencoop Società Cooperativa, with registered office in Zola Predosa

(BO), which exercises management and coordination activities and 28.11% owned by financial partners.

Manutencoop Facility Management S.p.A. drafts its financial statements (separate financial statements

based on the definition used by IAS 27) in application of art. 2423 of the Italian Civil Code, as amended by

Legislative Decree 127/1991.

Publication of Manutencoop Facility Management S.p.A.’s separate financial statements for the year ended

31 December 2014 was authorized by resolution of the Management Board of 24 March 2015.

The Company also drafts the Consolidated Financial Statements, which are attached hereto, as expressly

required by statutory provisions.

1.1 The business Manutencoop Facility Management is active, throughout Italy, in the management and provision of

integrated services to public and private customers, targeted at properties and property assets, logistics

and organisational support, in order to optimise the management of property-‐related activities (also

known as “Integrated Facility Management”).

Therefore, the Company, provides a wide and coordinated range of integrated services, aimed at

rationalising and improving the quality of the non-‐strategic and auxiliary activities of major private groups

and public authorities.

The so-‐called ‘‘traditional’’ Facility Management services provided by the Company include the following

activities:

› Cleaning;

› Technical Services;

› Landscaping.


Cleaning activity includes cleaning and hygiene services, sanitation, disinfection, pest control and rat

extermination, collection, transport and disposal of hospital waste and employs the highest number of

Company employees.

The second type of activity performed comes in the form of Technical Services, which encompass the

management, running and maintenance services of property-‐related systems (including heating and air

conditioning systems, cogeneration systems, electrical systems, water, sanitary, telephone and electronic

systems in general) including therein:

› design and implementation of redevelopment and adjustment work into line with the safety

legislation;

› design and installation of devices for energy saving and for the reduction of emissions of polluting

agents into the atmosphere.

Finally, a third type of activities attributable to the Facility Management services rendered by the Company

is the so-‐called Landscaping, i.e. a service for the maintenance of green spaces, which include both the

planning and implementation of maintenance of properties’ green areas, and services for the area.

In order to expand the range of facility management services offered to customers, coupled with the

aforementioned facility management services, the Company offers a series of additional, auxiliary services,

targeted at property users, including document management, concierge/reception, switchboard and

surveillance, porterage and internal relocation, management of computer workstations and other support

services.

The Company performs the aforementioned integrated service activities at offices, industrial plants,

warehouses, commercial and service industry buildings in general, green areas, car parks, crèches and

schools and universities, hotels, sports complexes, barracks and welfare buildings.

2. ACCOUNTING STANDARDS AND BASIS OF PRESENTATION

The Separate Financial Statements at 31 December 2014 comprise the Statement of financial position, the

Statement of Profit or Loss, the Statement of other Comprehensive Income, Statement of cash flows,

Statement of changes in Shareholders’ equity, and the related Explanatory Notes.

The Separate Financial Statements were prepared on a historical cost basis, except for the derivative

financial instruments that have been measured at fair value.

The Statement of financial position sets forth assets and liabilities distinguishing between current and non-‐

current. The Statement of Profit or Loss classifies costs by nature, while the Statement of the other

comprehensive Income sets forth the result for the period added with income and expenses, that in

accordance with IFRS, are directly recognized in the Shareholders’ equity. The Statement of cash flows has

been prepared on the basis of the indirect method and presented in accordance with IAS 7, distinguishing

between cash flow from operating, investing and financing activities.

The Financial statements at 31 December 2014 have been presented in Euro, which is the Group’s

functional currency. All values showed in the statements and in the explanatory notes are in thousands of

Euro, unless otherwise stated.


2.1 Statement of compliance with international accounting standards (IFRS) The Separate Financial Statements at 31 December 2014 have been prepared in accordance with the

International Financial Reporting Standards (“IFRS”).

The Company is subject to Letter f) of Article 2 under the Italian Legislative Decree no. 38 of 28 February

2005, which rules the exercise of the options provided for by the Article 5 of Regulation (EC) 1606/2002

about the International Financial Reporting Standards and, therefore, pursuant to Article 3, paragraph 2,

and Article 4, paragraph 5, of the aforesaid Italian Legislative Decree, the Company has applied the IFRS as

adopted by the European Union in the preparation of its separate Financial Statements as from the year

ended 31 December 2005.

2.2 Changes in accounting standards and disclosures The criteria adopted for the preparation of the separate Financial Statements are consistent with those

used to prepare the separate Financial Statements of the previous year.

The Company did not provide for the early adoption of any standard, interpretation or improvement

issued but still not obligatorily in force.

New or revised IFRS and interpretations applicable as from 1 January 2014. The following accounting standards must be applied starting from 1 January 2014:

› IFRS 12 – Disclosure of Interests in Other Entities. The new standard provides a general overview of the

information relating to interests in other entities, such as joint arrangements, equity investments in

subsidiaries, associates and other interests not falling within the consolidation area. The Company

does not apply the IFRS 12 as the required information has been reported in the Group’s consolidated

financial statements.

There is no obligation to apply accounting standards on new or revised IFRS, with effect from 1 January

2014.

New or revised IFRS and interpretations applicable from subsequent years and not adopted by the Company in advance. The IASB issued a number of new standards and amendments during the 2014 financial year which will

come into effect in later periods. The Company is studying these standards and is assessing the impact

they will have on its Separate Financial Statements, but does not intend to promote an early adoption. The

innovations brought in are described below.

IFRS9 Financial Instruments (applicable from the financial years that will end after 1 January 2018). The aim

of the new standard is to make it simpler for the user of the financial statements to understand the

amounts, timing and uncertainty of cash flows by replacing the different types of financial instruments

referred to in IAS 39. In fact all financial assets are initially accounted for at fair value, adjusted by

transaction costs if they are not accounted for at fair value through profit and loss (FVTPL). Nevertheless,

trade receivables that do not have a significant financial component are initially measured at their

transaction price, as defined by the new IFRS 15 – Revenues from Contracts with Customers. Debt

instruments are measured on the basis of the contract cash flows and the business model on the basis of

which they are held. Instruments only involving cash flows for the payment of interest and principal are


accounted for according to the amortised cost method, while those also involving the exchange of financial

assets are measured at fair value in the OCIs and subsequently reclassified in profit and loss (FVOCI).

Finally, there is an express option for accounting at fair value (FVO). Similarly, all equity instruments are

initially measured at FVTPL but the entity has an irrevocable option to account for it at FVTOCI. Any

additional classifications and the measurement rules laid down under IAS39 have been reported under the

new IFRS9. As regards impairment, the IAS39 model based on the losses incurred has been replaced by the

ECL (Expected Credit Loss) model. Finally, some changes are made in Hedge Accounting, with the

possibility of conducting a prospective effectiveness and quality test, measuring risk factors independently

if they can be identified.

IFRS15 – Revenues from contracts with customers (applicable from the financial years that will end after 1

January 2017). The new standard replaces the previous IAS11 – Construction contracts, IAS18 – Revenue,

IFRIC13 – Customer Loyalty Programme, IFRIC15 – Agreements for the construction of real estate, IFRIC18

– Transfers of Assets from Customers, SIC31 – Barter Transactions Involving Advertising Services. This

standard provides a model for the recognition and measurement of all revenues from non-‐financial assets,

including the disposals of property, plant and equipment or intangible assets. The general principle is that

the entity must recognise revenue in the amount corresponding to the consideration to which it expects to

be entitled for transferring goods or providing a service to a customer. Guidelines are laid down for

identifying the contract, the performance obligations and the transaction price. If there are multiple

services, suggestions are also given regarding the allocation of their prices. Finally, the criteria for

accounting for the revenue when the performance obligation has been satisfied are explained and

suggestions are made for accounting for the incremental costs of obtaining the contract if these costs are

directly attributable to its performance. Finally, the standard provides guidance on its application to

specific issues such as licences, guarantees, right of withdrawal, agency relationships, termination of

contracts. The standard is applicable according to a full retrospective approach or a modified retrospective

approach.

Some amendments to existing standards have also been issued, clarifying some particular points:

› Amendments to IFRS11 – Joint Arrangements. This amendment explains that if an entity acquires an

interest in a joint operation which constitutes a form of business, it must apply the accounting

standards and disclosure requirements laid down in IFRS 3, Business Combinations, and those in all

other IFRSs that do not conflict with the provisions of IFRS 11.

› Amendments to IAS16 and IAS38 – Clarification of Acceptable Methods of Depreciation and

Amortisation. This amendment explains that it is advisable to use methods of amortisation and

depreciation of fixed assets that take the actual economic benefit of using them into account. If goods

or assets are used in business operations, the ratio between the revenue generated by business and

the entity’s total revenues is not a correct reflection of the amortisation or depreciation percentage to

apply. This ratio may only be used in limited cases for the amortisation of intangible assets.

› Amendments to IAS27 – Equity Method in Separate Financial Statements. This amendment explains

that since the equity method is used for accounting for investments in subsidiaries and associates in

certain countries, the option previously provided for in IAS 27 has been reinstated. Therefore, the

investments in the Separate Financial Statements can be valued at cost (IAS27), in accordance with

IAS39 or the new IFRS9 or by using the equity method (IAS27 amended). The method adopted must

be applied homogeneously for all types of these investments.


Improvements to IFRS In 2014 the IASB issued a new series of amendments to IFRS (series 2012-‐2014, which follows the previous

series 2009-‐2011, 2010-‐2012 and 2011-‐2013). The Annual improvement of international standards is the

instrument by which the IASB introduces amendments or improvements to the standards that are already

being applied, thus promoting the ongoing review of the accounting policies of the IAS adopters. The

amendments will be obligatory applicable as from the financial years that will end after 1 January 2016.

The last series of improvements has specifically concerned a change in the sales programmes under IFRS5

– Non-‐current Assets Held for Sale and Discontinued Operations, the applicability of IFRS7 – Financial

Instruments in the condensed Interim Financial Statements, the use of discount rates under IAS19 –

Employee Benefits and the disclosures to be supplemented with respect to IAS34 – Interim Financial

Reporting.

2.3 Discretionary assessments and significant accounting assumptions The preparation of the Separate Financial Statements requires Management Boards to make discretionary

assessments, estimates and assumptions that affect the amounts of revenues, costs, assets and liabilities,

and the indication of contingent liabilities at the date of the financial statements. However, the uncertainty

of these assumptions and estimates could lead to outcomes which may require a significant adjustment to

the carrying amount of said assets and/or liabilities in the future.

Discretionary assessments The main decisions taken by the Directors, on the basis of discretionary assessments (excluding those

relating to accounting estimates), in the application of the accounting standards of the Group, with a

significant effect on the values recognized in the accounts relate to the adoption, starting from 2007, of

the continuity of values principle for the recognition of business combinations under common control.

Application of this principle gives rise to the recognition in the statement of financial position of values

equal to those that would be recorded if the companies involved in the business combination had always

been combined. The net assets of the acquiree and of the acquiring entity are therefore recorded on the

basis of the carrying amounts included in their respective accounts before the transaction.

Uncertainty of estimates The key assumptions regarding the future and other significant sources of uncertainty relating to estimates

as at the period ending date of the separate Financial Statements are detailed below.

Impairment test Goodwill is subject to impairment test at least annually, or more frequently if there is an indication of

potential impairment in the carrying amounts. This requires an estimate of the value in use of the CGU

(cash-‐generating unit) to which the goodwill is allocated, in turn based on an estimate of expected cash

flows from the CGU and their discounting on the basis of a suitable discount rate.

More details are given in the appropriate section.

At 31 December 2014, the carrying amount of the goodwill stood at € 293,239 thousand (31 December

2013: € 288,649 thousand). More details are given in the appropriate section.


Recognition of the present value of liabilities for Put Options on minority shares of subsidiaries and of the present value of liabilities for Earn-‐outs on acquisitions made The Company holds majority interests in a subsidiary subsidiaries in relation to which the minority

shareholders hold PUT option, which can be exercised in the future at prices determined on the basis of

certain parameters that require estimates from management for the purposes of reliable valuation.

Similarly, the contract for the purchase of certain majority interests in subsidiaries provided for the

transferors, i.e. the currently minority shareholders, to be granted an earn-‐out upon the fulfilment of given

conditions on a certain future date. In this case, the correct recognition in the financial statements of the

related liability requires management to make some estimates to determine the expected relevant

parameters.

Other financial position items Management also needed to use estimates in determining:

› Deferred tax assets, in particular relating to the likelihood of these being reversed in the future;

› Accruals to bad debt provision and provisions for risks and charges;

› Main assumptions applied to the actuarial valuation of the TFR (employee benefits), such as the future

turnover rate and discount financial rates;

› Inventories of contract work in progress, particularly in relation to the total amount of estimated costs

to complete used to determine the percentage of completion.

2.4 Summary of the main accounting criteria Equity investments in joint ventures The Company participates in numerous joint ventures classified as companies under joint control. A joint

venture is a contractual agreement whereby two or more parties undertake an economic activity subject

to joint control; a jointly controlled company is a joint venture that involves the setting up of a separate

company in which each participant holds interests.

Joint control is deemed to exist when 50% is held.

Conversion of foreign currency items The financial statements are presented in Euro, the Company’s functional currency.

Statements of financial position and income statements stated in foreign currency are converted to Euro

using the year-‐end exchange rates for financial statement items and average exchange rates for items in

the income statement.

Business combinations Business combinations are recorded using the acquisition method. According to this method, the amount

transferred in a business combination is measured at fair value, calculated as the sum of the fair values of

the assets transferred and the liabilities undertaken by the Company at the acquisition date and the

equities issued in exchange for control of the acquired company. Accessory charges involved in the

transaction are generally recorded in the income statement when they are incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recorded at fair

value on the acquisition date; the following items constitute an exception, and are, by contrast, valued

according to their reference principle:


› Deferred tax assets and liabilities;

› Assets and liabilities for employee benefits;

› Liabilities or equities relating to share-‐based payments of the acquired company or share-‐based

payments relating to the Company issued in replacement of the contracts of the acquired company;

› Assets held for sale and Discontinued Operations.

Goodwill is calculated as the excess between the sum of consideration paid in the business combination,

the value of shareholders’ equity pertaining to minority interests and the fair value of the equity

investment held previously in the acquired company with respect to the fair value of the net assets

acquired and liabilities assumed at the acquisition date. If the value of the net assets acquired and

liabilities assumed at the acquisition date exceeds the sum of consideration paid, value of shareholders’

equity pertaining to minority interests and fair value of the equity investment held previously in the

acquired company, this excess is recorded immediately in the income statement as income deriving from

the transaction.

Any payments subject to conditions set out in the business combination agreement are measured at fair

value at the acquisition date and included in the value of the amounts transferred in the business

combination for the purposes of determining its goodwill. Any subsequent changes of such fair value,

which is qualified as adjustments that emerged in the measurement period, are included retrospectively in

goodwill. Changes in fair value which are qualified as adjustments that emerged in the measurement

period are those that derive from more information on events and circumstances that existed at the

acquisition date, obtained during the measurement period (which cannot exceed one year from the

business combination).

In the event of business combinations taking place in phases, the equity investment held previously by the

Company in the acquired company is re-‐measured at fair value on the date of acquisition of control and

any resultant profit or loss is booked in the income statement. Any values deriving from equity

investments held previously and recorded under “Other Comprehensive Profits or Losses” are reclassified

in the income statement as if the equity investment had been sold.

If the initial values of a business combination are incomplete by the end of the reporting period in which

the business combination took place, the Company reports in its financial statements the temporary values

of the elements for which the recognition cannot be completed. These temporary values are adjusted in

the measurement period to take into account the new information obtained on events and circumstances

existing at the acquisition date which, if known, would have had effects on the value of the assets and

liabilities recognised at that date.

Property, plant and equipment Property, plant and equipment are recorded at historical cost, net of the associated accumulated

depreciation and accumulated impairment losses. This cost includes the costs for the replacement of part

of the plant and equipment at the moment they are incurred if they conform to the recognition criteria.

Depreciation is calculated on a straight line basis in line with the estimated useful life of the asset, starting

from the date the asset becomes available for use, until the date it is sold or disposed of.

The carrying amount of the property, plant and equipment is subject to impairment test when events or

changes suggest that the carrying amount may not be recoverable.


A tangible asset is eliminated from the financial statements at the moment of sale or when no future

economic benefits are expected from its use or disposal. Any profits or losses (calculated as the difference

between net income from the sale and the carrying amount) are included in the income statement in the

year of the aforementioned elimination.

The residual value of the asset, useful life and method applied are reviewed annually and adjusted, if

necessary, at the end of each financial year.

The useful life of the various classes of tangible assets is estimated as shown below:

Useful Life

Plant and equipment, maintenance and landscaping 11 years Plant and equipment and construction of properties From 6.5 to 10 years Telephone systems 4 years Equipment for cleaning/landscaping activities 6.5 years Equipment for technological system management 3 years Equipment for building construction and maintenance 2.5 years Other industrial and commercial equipment 10 years Laundry equipment 8 years Linen From 2.5 to 4 years Vehicles From 4 to 5 years Office furniture and equipment From 5 to 8 years Leasehold improvements (including plant and equipment) < between useful life and lease duration

The plant and equipment category includes not only plant and equipment in the strictest sense, but also

machinery, motor vehicles, office machines and furniture.

Financial charges deriving from the purchase are charged to the income statement except in the case in

which they are directly attributable to the acquisition, construction or production of an asset which

justifies their capitalisation (qualifying asset), in which case they are capitalised.

A qualifying asset is an asset that requires a certain period of time to be ready for use.

The capitalisation of financial charges ceases when all the activities needed to make the qualifying asset

ready for use have been substantially completed.

Extraordinary maintenance expenses are only included in the carrying amount of the asset when the

company is likely to receive the associated economic benefits in the future and the cost can be reliably

measured. The costs of repairs, maintenance or other operations to ensure the functioning of the assets

are charged to the income statement in the year in which they are incurred.

Leasehold improvements are classified, on the basis of the nature of the cost incurred, under property,

plant and equipment when they meet the capitalisation criteria set forth by IAS 16. The depreciation

period corresponds to the lower of the residual useful life of the tangible fixed asset and the residual

duration of lease.

Goodwill Goodwill, acquired in a business combination, is initially valued at cost, represented by the excess of the

cost of the business combination with respect to the share pertaining to the Company in the net fair value

relating to the identifiable values of assets, liabilities and contingent liabilities. After the initial recognition,

goodwill is valued at cost less any accumulated impairment losses. Goodwill is subject to an analysis of

consistency on an annual basis, or more frequently if events or changes are identified which may give rise

to impairment losses.


For the purposes of this analysis of consistency, goodwill is allocated, from the date of acquisition, when

the allocation is possible without arbitrariness, to each of the cash-‐generating units of the Group which

believe that they will benefit from the synergies of the acquisition, irrespective of the allocation of other

assets or liabilities to said units. Each unit to which goodwill is allocated:

› represents the lowest level, within the Company, at which goodwill is monitored for internal

management purposes; and

› is not larger than the segments identified on the basis of either the primary or secondary presentation

layout as regards disclosures on the Group’s operating segments, based on IFRS 8 -‐ Operating

Segments.

Impairment is determined by defining the recoverable value of the cash-‐generating unit (or group of units)

to which goodwill is allocated. When the recoverable value of the cash-‐generating unit (or group of units)

is lower than the carrying amount, an impairment loss is recorded.

The value of goodwill previously written down cannot be restored.

Other intangible assets Intangible assets acquired separately are initially capitalised at cost, while those acquired through business

combinations of companies not subject to joint control are capitalised at fair value on the date of

acquisition. After initial recognition, intangible assets are recorded at cost net of amortisation and

accumulated impairment losses.

The useful life of the intangible assets is finite or indefinite.

Intangible assets with a finite useful life are amortised over their useful life and subject to consistency tests

when there is an indication of potential impairment losses. The amortisation period and method applied

are reviewed at the end of each financial year or more frequently if necessary. Changes in the expected

useful life or the methods with which the future economic benefits of the intangible asset are achieved by

the Company are recorded by modifying the amortisation period or method, as necessary, and treated as

changes in the accounting estimates. The amortisation charges of intangible assets with a finite useful life

are recorded in the income statement under the cost category ‘amortisation, write-‐downs and write-‐backs

of assets’. The Company did not record any intangible assets with an indefinite useful life, with the

exception of goodwill.

The principles the Company applied for intangible assets are summarised below:

Concessions, licences, trademarks and similar Other intangible assets

Useful Life Definite Indefinite Method used Software, Trademarks and Patents Contractual relations with customers

Amortisation on a straight line basis over the shortest time span between: > legal duration of the right; > expected period of use

Amortisation in proportion to consumption of backlog.

Backlog Amortisation in proportion to the contract term

Produced internally or purchased Purchased Acquired in business combination. Impairment tests / tests on recoverable value

Yearly or more frequently when there are signs of impairment.

Yearly or more frequently when there are signs of impairment.


Profits or losses deriving from the disposal of an intangible asset are measured as the difference between

the net sales revenue and the carrying amount of the asset, and are recognised in the income statement at

the moment of disposal.

Equity investments in subsidiaries and associates Subsidiaries are companies over which Manutencoop Facility Management S.p.A. has the independent

power to determine the strategic decisions of the company and obtain the associated benefits. Generally

speaking, control is said to exist when, directly or indirectly, more than half of the voting rights which can

be exercised at the ordinary shareholders’ meeting are held, also considering so-‐called potential votes, i.e.

voting rights deriving from convertible instruments.

Associates are companies over which Manutencoop Facility Management S.p.A. exercises a significant

influence as regards the determination of the company’s strategic decisions, despite not having control,

also considering so-‐called potential votes, i.e. voting rights deriving from convertible instruments; a

significant influence is said to exist when Manutencoop Facility Management S.p.A. holds, directly or

indirectly, more than 20% of the voting rights which can be exercised at the ordinary shareholders’

meeting.

Equity investments in subsidiaries and associates are measured at purchase costs, and reduced in the

event of the distribution of capital or capital reserves, or in the presence of impairment losses determined

by impairment testing. The cost is written back in subsequent years if the reasons for the write-‐downs no

longer exist.

For all companies, a list of which is supplied in the appropriate notes, the cost criterion was applied in

Manutencoop Facility Management S.p.A.’s financial statements.

The carrying amount of property, plant and equipment is subject to impairment test when events or

changes suggest that the carrying amount may not be recoverable.

Impairment of assets At the close of each financial year, the Company assesses whether there are any indicators of impairment

of assets. In this case, or in the event an annual impairment test is required, the Company prepares an

estimate of the recoverable value. The recoverable value is the higher of the fair value of an asset or cash-‐

generating unit net of sales costs and its value in use is determined for each individual asset, except when

said asset does not generate cash flows that are fully independent from those generated by other assets or

groups of assets. If the carrying amount of an asset is higher than its recoverable value, said asset has been

impaired and is subsequently written down to its recoverable value. In calculating the value in use, the

Company discounts estimated future cash flows at the current value by using a pre-‐tax discount rate which

reflects the market valuations on the time value of money and the specific risks of the asset. Impairment

losses of operating assets are recorded in the income statement under the category ‘amortisation, write-‐

downs and write-‐backs of assets’.

At the close of each financial year, the Company also assesses the existence of indications that the

impairment losses recorded previously no longer exist (or have fallen) and, if said indications exist,

estimate the recoverable value. The value of an asset previously written down can only be restored if there

have been changes to the estimates used to calculate the recoverable value of the asset following the

latest recognition of an impairment loss. In said case, the carrying amount of the asset is adjusted to the

recoverable value, without, however, the increased value exceeding the carrying amount that would have

been determined, net of amortisation, if no impairment loss had been recognised in the preceding years.


Any write-‐back is recorded as income in the income statement, in the same category in which the write-‐

down was recorded, except where the asset is recognised in a revalued amount, in which case the write-‐

back is treated as a revaluation. After a write-‐back has been recorded, the amortisation charge of the asset

is adjusted in future periods, in order to break down the modified carrying amount, net of any residual

values, on a straight line basis over the remaining useful life.

Financial assets IAS 39 makes provision for the following types of financial instruments:

› financial assets at fair value with changes booked to the income statement, a category which includes

the financial assets held for trading, i.e. all assets acquired for short-‐term sale;

› loans and receivables, defined as non-‐derivative financial assets with fixed or determinable payments

that are not listed on an active capital market;

› investments held to maturity, i.e. financial assets that are not derivative instruments and which are

characterised by fixed or determinable payments on maturity for which the owner has the intention

and capacity to hold them in the portfolio to maturity.

› available-‐for-‐sale financial assets, i.e. financial assets, excluding derivative financial instruments,

which have been designated as such or are not classified in one of the other three previous categories.

All financial assets are initially recorded at fair value, increased, in the event of assets other than those at

fair value in the income statement, by accessory charges. Following the initial recognition, the Company

determines the classification of its financial assets and, where appropriate and permitted, reviews said

classification at the close of each financial year.

The financial assets held by the Company in the year just ended, equal to those held in the previous year,

relate exclusively to the two categories ‘loans and receivables’ and ‘available-‐for-‐sale financial assets’.

The valuation criteria applied by the Company are the following:

Loans and receivables Loans and receivables are recorded according to the amortised cost criterion using the effective discount

rate method. Profits and losses are booked to the income statement when the loans and receivables are

eliminated for accounting purposes or when impairment losses occur, plus through the amortisation

process.

Available-‐for-‐sale financial assets Available-‐for-‐sale financial assets, following initial recognition at cost, must be valued at fair value and

profits and losses must be recorded in a separate shareholders’ equity item until the assets are eliminated

for accounting purposes or until it has been verified that they have been impaired: profits or losses

accumulated up until that moment in shareholders’ equity are then charged to the income statement.

For the year ended however, as in the previous year, the Company classifies investments of lower than

20% in this category, which are valued at cost if the calculation of the fair value is not reliable. In particular,

consortium companies and consortia, which are not listed on regulated capital markets and whose

objective is to regulate relations as part of temporary associations of companies established for the

operational purposes of management of some service contracts, are valued at cost, represented by the

portion of subscribed share capital.


Inventories Inventories are valued at the lower of cost and net presumed realisable value (replacement cost).

The costs incurred to deliver each asset to its current location and for warehousing are recorded as

follows:

Raw materials (excluding fuel) Purchase cost based on the average weighted cost method

Fuel inventories Purchase cost based on the FIFO method

The net presumed realisable value of raw materials is represented by the replacement cost.

Trade receivables and other receivables Trade receivables, which generally have contractual maturities of between 30-‐90 days, are recorded at

nominal value, stated in the invoice net of the bad debt provision. This allocation is made in the presence

of objective evidence that the Company will not be able to collect the receivable. Uncollectible receivables

are written down when they are identified.

Receivables and payables in a foreign currency other than the functional currency of the individual entities

are adjusted at the year-‐end exchange rates.

Contracts for construction work and plant building A job order is a contract specifically stipulated for the construction of an asset on the instructions of a

purchaser, who defines its design and technical features on a preliminary basis.

Job order revenues include the considerations initially agreed with the purchaser, plus changes to the job

order and price variations set out in the contract which can be determined reliably.

When the result of the job order can be determined reliably, the job orders are valued on the basis of the

percentage completion method; the progress status is determined by making reference to the costs of the

job order incurred up to the balance sheet date as a percentage of total estimated costs for each job order.

When the costs of the job order are likely to exceed total revenues, the expected loss is recorded

immediately as cost.

The percentage of completion determined in this manner is then applied to the contract price in order to

determine the value of work in progress, classified under “Trade receivables”. When the costs of the job

order are likely to exceed total revenues, the expected loss is recognized immediately as a provision.

Should the amount of the contract price already invoiced exceed the estimated value of work in progress,

it must be recognised as a payable for the portion exceeding the value of the same and, as such, must be

classified under "Advances from customers".

Cash and cash equivalents Cash and cash equivalents and short-‐term deposits in the financial statement include cash at hand and

sight and short-‐term deposits, in the latter case with an original maturity of no more than three months.

Loans All loans are initially recorded at the fair value of the consideration received net of accessory charges

involved in acquiring the loan.

After initial recognition, loans are valued according to the amortised cost criterion using the effective

interest rate method.


All profits or losses are recognised in the income statement when the liability is extinguished, plus through

the amortisation process.

Elimination of financial assets and liabilities Financial assets A financial asset (or, where applicable, part of a financial asset or parts of a group of similar financial

assets) is derecognised from the financial statements when:

› the contractual rights over cash flows deriving from financial assets have expired;

› the Company has transferred the financial asset (transferring the right to receive cash flows from the

asset or retaining the right to receive these but assuming the contractual obligation to pay them in full

and without delay to a third party) and has transferred substantially all risks and rewards of ownership

of the financial asset.

If, as a result of the transfer, a financial asset is completely eliminated, but the result is that the Group

obtains a new financial asset or assumes a new financial liability, the Company records the new financial

asset, financial liability or liability originating from service at fair value.

Financial liabilities A financial liability is derecognised from the financial statements when the obligation underlying the

liability is extinguished, cancelled or fulfilled.

In cases where an existing financial liability is replaced by another of the same provider, under essentially

different conditions, or the conditions of an existing liability are essentially modified, said exchange or

modification is treated as derecognition of the original liability and the recognition of a new liability, and

any differences in the carrying amounts are booked to the income statement.

Impairment of financial assets At the end of each financial year, the Company assesses whether a financial asset or group of financial

assets has incurred any impairment loss.

Assets valued according to the amortised cost criterion If there is objective evidence that a loan or receivable carried at amortised cost has suffered an

impairment loss, the amount of the loss is measured as the difference between the carrying amount of the

asset and the present value of estimated future cash flows (excluding future credit losses still not incurred)

discounted at the original effective interest rate of the financial asset (i.e. effective interest rate calculated

at the initial recognition date). The carrying amount of the asset will be reduced both directly and through

the use of a provision.

The amount of the loss will be booked to the income statement.

The Company firstly assesses the existence of objective evidence of an impairment loss at individual level,

for financial assets that are significant on an individual basis, and therefore at individual or collective level

for financial assets that are not significant on an individual basis. In the absence of objective evidence of

impairment of a financial asset valued individually, whether it is significant or not, said asset is included in

a group of financial assets with similar credit risk characteristics and said group is subject to impairment

test in a collective fashion. The assets valued at individual level and for which an impairment loss is

recorded or continues to be recorded, will not be included in a collective valuation.


If, in a subsequent financial year, the size of the impairment loss falls and said reduction can be related

objectively to an event which occurred after the recognition of the impairment loss, the previously

reduced value can be written back. Any subsequent write-‐backs are booked to the income statement to

the extent the carrying amount does not exceed the amortised cost at the write-‐back date.

Assets recognised at cost If there is objective evidence of an impairment of an unquoted equity instrument which is not recognised

at fair value since its fair value cannot be reliably measured, or of a derivative instrument which is linked to

said equity and has to be settled through the delivery of said instrument, the amount of the impairment

loss is measured by the difference between the carrying amount of the asset and the present value of

expected future cash flows and discounted at the current market rate of return for a similar financial asset.

Available-‐for-‐sale financial assets In the case of an impairment of an available-‐for-‐sale financial asset, a transfer from shareholders’ equity to

the income statement is effected of a value equal to the difference between its cost (net of the repayment

of capital and amortisation) and its present fair value, net of any impairment losses recognised previously

in the income statement. Write-‐backs of equities classified as available for sale are not recognised in the

income statement. Write-‐backs of debt instruments are recognised in the income statement if the increase

in the fair value of the instrument can be related objectively to an event which occurred after the loss was

recognised in the income statement.

Non-‐current financial liabilities, Other non-‐current liabilities, Trade payables, Current financial liabilities and Other liabilities Non-‐current financial liabilities, Other non-‐current liabilities, Trade payables, Current financial liabilities

and Other liabilities are initially recorded at fair value in the financial statements (normally represented by

the cost of the transaction), including the transaction’s accessory costs.

Subsequently, with the exception of derivative financial instruments and liabilities for financial guarantee

contracts, financial liabilities are stated at amortised cost using the effective interest rate method.

Provisions for risks and charges Allocations to provisions for risks and charges are made when the Company has to fulfil a current

obligation (legal or implicit) resulting from a past event, resources are likely to be sacrificed to meet said

obligation and its amount can be reliably estimated.

When the Company believes that an allocation to the provision for risks and charges will be partially or

fully reimbursed, e.g. in the event of risks covered by insurance policies, the compensation is recorded

separately under assets only if it is virtually certain. In said case, the cost is stated in the income statement

of the associated allocation net of the amount recorded for the compensation.

If the effect of discounting the value of money is significant, provisions are discounted using a pre-‐tax

discount rate which reflects, where appropriate, the specific risks of the liabilities. When discounting is

carried out, the increase in the provision due to the passing of time is recorded as a financial charge.


Provision for employee termination benefits Liabilities in the form of employee termination benefits are only recorded when the Company is

demonstrably committed to: (a) terminate the employment of an employee or group of employees before

the normal retirement date; or (b) provide termination benefits as a result of an offer made in order to

encourage voluntary redundancy. The Company is demonstrably committed to a termination only when it

has a detailed formal plan for the dismissal (termination of employment) and is without realistic possibility

of withdrawal from the plan.

Employee benefits Italian legislation (art. 2120 of the Civil Code) requires that, on the date of termination of their

employment with the company, each employee receives compensation known as ESI (Employee Severance

Indemnity). Calculation of this indemnity is based on certain items that form the annual employee

remuneration for each year of employment (re-‐valued as necessary) and on the length of service.

According to statutory Italian legislation, said indemnity is reflected in the financial statements according

to a calculation method based on the indemnity accrued by each employee at the balance sheet date, in

the assumption that all employees end their employment at said date.

The IFRIC issued by the IASB tackled the issue of Italian ESI and concluded that, in application of IAS 19, it

falls within the scope of “defined benefit” plans, as regards post-‐employment benefits and, as such, must

be calculated using the Projected Unit Credit Method, in which the amount of liabilities in the form of

acquired benefits must reflect the expected date of termination and must be discounted.

Following the 2007 reform of national legislation which governs, for companies with more than 50

employees, ESI accruing from 1 January 2007, it is established as a “defined contribution” plan, whose

payments are booked directly to the income statement, as a cost, when recognised. ESI accrued up until

31.12.2006 remains a defined benefit plan, without future contributions.

The Company records actuarial gains or losses in the accounts deriving from the application of the

aforementioned method (Projected Unit Credit Method), in an appropriate shareholders’ equity reserve

according to the provisions of IAS 19. The actuarial valuation of the liability was entrusted to an

independent actuary.

The Company has no other significant defined benefit pension plans.

Leasing The definition of a contractual agreement as a leasing transaction (or containing a leasing transaction) is

based on the substance of the agreement and requires an assessment of whether fulfilment of the

contractual obligations depends on the use of one or more specific assets and whether the agreement

transfers the right to use said asset.

A review is carried out after the start of the contract only if one of the following conditions is met:

(a) there is a change in the contractual conditions, other than a contract renewal or extension;

(b) a renewal option is exercised or an extension granted, provided that the terms of the renewal or

extension were not initially included in the terms of the leasing transaction;

(c) there is a change in conditions according to which fulfilment of the contract depends on a specific asset;

or

(d) there is a substantial change in the asset.


Where a review is carried out, accounting of the leasing will start or end from the date on which the

circumstances change which gave rise to the revision for cases a), c) or d) and on the renewal or extension

date for scenario b).

For contracts signed prior to 1 January 2005, the start date is considered 1 January 2005, in line with the

transitional provisions of IFRIC 4.

Finance leasing contracts, which substantially transfer all risks and rewards of the leased asset to the

Company, are capitalised at the date of the start of the lease at the fair value of the leased asset or, if

lower, at the present value of rental fees. Rental fees are split between the portions of principal and

interest so as to obtain the application of a constant interest rate on the residual debt balance. Financial

charges are charged directly to the income statement.

Capitalised leased assets are amortised over the estimated useful life of the asset and the duration of the

lease, whichever is the shorter, if there is no reasonable certainty that the Company will obtain ownership

of the asset at the end of the contract.

Operating lease rental fees are recorded as costs in the income statement on a straight line basis over the

duration of the contract.

Revenue recognition Revenues are recorded to the extent in which it is likely that economic benefits can be achieved by the

Company and the associated amount can be reliably determined. The following specific revenue

recognition criteria must be adhered to before revenues are booked to the income statement:

Provision of service The main types of service provided by the Company, separately or jointly as part of Integrated Services,

are:

› management and maintenance of properties and plants, often associated with the provision of heat

(energy service);

› cleaning and environmental hygiene services;

› landscaping;

› project management services;

› linen rental and industrial laundering and sterilization services.

Revenues are recognised on the basis of the progress of the services underway at the balance sheet date,

measured as a percentage with reference to the different variables depending on the services provided

and the contracts stipulated with the customer (square metres, hours, costs incurred, hospital days).

The provisions of services, which are still not completed at the balance sheet date, constitute contract

work in progress and are classified under trade receivables.

Revenues billed at the balance sheet date, which exceed the amount accrued on the basis of the progress

status of the service, are suspended under advances from customers, and classified under trade payables.

The considerations, also as part of multi-‐service contracts, are, as a rule, defined separately by service type

and the amount of revenues to be attributed to the individual services is quantified at fair value.

When the outcome of a services transaction cannot be measured reliably, revenues are only recognised to

the extent it is believed that the costs incurred can be recovered.


Building activity The Company records the revenues deriving from building contracts on the basis of the progress status of

the job order, measured as a percentage of the costs incurred with respect to the total estimated costs for

completing the work. When the outcome of a job order cannot be measured reliably, revenues are only

recognised to the extent it is believed the costs incurred can be recovered.

Sale of assets The revenue is recognised when the company has transferred all significant risks and rewards related to

ownership of the asset to the acquirer.

Interest Interest is recorded as financial income following the verification of interest income accrued (carried out

using the effective interest rate method which is the rate that accurately discounts expected future cash

flows based on the expected life of the financial instrument at the net carrying amount of the financial

asset).

Dividends Revenues are recognised when the right of shareholders to receive the payment arises.

Government grants Government grants are recorded when it is reasonably certain they will be received and all inherent

conditions are met. When grants are related to cost components, they are recorded as revenues, but are

systematically split over the financial years so they are commensurate with the costs they intend to

compensate. In the event the grant is related to an asset, the fair value is subtracted from the carrying

amount of the asset to which it is related and the release to the income statement occurs progressively

over the expected useful life of the asset on a straight line basis, through the systematic reduction of the

associated amortisation charges.

Income taxes Current taxes Current tax assets and liabilities for the financial year are valued by applying estimate criteria to determine

the amount pertaining to the financial year which is expected to be recovered or paid to the tax

authorities. The rates and tax legislation used to calculate the amount are those issued at the balance

sheet date.

Deferred taxes Deferred taxes are calculated on the temporary differences recorded at the balance sheet date between

the tax values taken as a reference for assets and liabilities and the values stated in the financial

statements.

Deferred tax liabilities are recorded against all temporary taxable differences, except:

› when deferred tax liabilities derive from the initial recognition of goodwill or of an asset or liability in a

transaction which is not a business combination and which, at the time of the transaction, does not

have any effect on the profit for the year calculated for financial statement purposes or the profit or

loss calculated for tax purposes;


› with reference to taxable temporary differences associated with equity investments in subsidiaries,

associates and joint ventures, in the event in which the reversal of the temporary differences can be

controlled and it is not likely to occur in the foreseeable future.

Deferred tax assets are recognised against all deductible temporary differences and for tax assets and

liabilities carried forward, to the extent it is possible that there will be adequate future tax profits that

make the use of temporary deductible differences and tax assets and liabilities carried forward applicable,

except in the case in which:

› deferred tax assets connected to deductible temporary differences derive from the initial recognition

of an asset or liability in a transaction which is not a business combination and which, at the time of

the transaction, does not have any effect on the profit for the year calculated for financial statement

purposes or the profit or loss calculated for tax purposes; › with reference to taxable temporary differences associated with equity investments in subsidiaries,

associates and joint ventures, deferred tax assets are recorded only to the extent in which it is likely

that the deductible temporary differences will be reversed in the immediate future and that sufficient

tax profits will be generated against which the temporary differences can be used.

The value of deferred tax assets to be recorded in the financial statements is reviewed at the close of each

financial year and reduced to the extent it is no longer likely that sufficient tax profits will be available in

the future to permit all or part of said receivable to be used. Unrecognised deferred tax assets are

reviewed annually at the balance sheet date and are recorded to the extent it has become likely that the

tax profit is sufficient to allow said deferred tax assets to be recovered.

Deferred tax assets and liabilities are measured on the basis of the tax rates that are expected to be

applied in the year in which said assets are sold or said liabilities are extinguished, considering the rates in

force and those already issued or substantially issued at the balance sheet date.

Income taxes relating to items recorded directly in shareholders’ equity are charged directly to

shareholders’ equity and not to the income statement.

Deferred tax assets and liabilities are offset, if there is a legal right to offset the current tax assets with

current tax liabilities and the deferred taxes refer to the same tax entity and the same tax authorities.

VAT Revenues, costs and assets are recorded net of VAT, with the exception of the case in which said tax

applied to the purchase of goods or services is non-‐deductible, in which case it is recognised as part of the

purchase cost of the asset or part of the cost item booked to the income statement.

The net amount of indirect taxes on sales and purchases that can be recovered from or paid to the tax

authorities is included in the financial statements under other receivables or payables depending on

whether the balance is receivable or payable.

Derivative financial instruments and hedges At the moment of initial recognition, then subsequently, derivative instruments are booked at fair value,

changes in fair value are recorded in the income statement, with the exception of cash flow hedges (as per

IAS 39), whose fair value changes are charged to shareholders’ equity.

If they meet the requirements set out in IAS 39 for the application of hedge accounting, these derivative

instruments are accounted for using such method.


In particular, the transaction is considered a hedge if documentation exists on the relationship between

the hedging instrument and the liability hedged that shows risk management objectives, the hedging

strategy and methods used to verify the effectiveness of the hedge. A transaction is considered a hedge if

the effectiveness is verified at the moment it starts and, going forward, confirmed during its entire life.

Within the scope of the International Accounting Standards (IFRS), these instruments are viewed as

derivative financial instruments. These derivative financial instruments are initially recorded at fair value at

the date they are stipulated; subsequently, said fair value is periodically re-‐measured. They are accounted

as assets when the fair value is positive and liabilities in the case of a negative fair value.

Any profits or losses resulting from changes in the fair value of derivatives that do not qualify for hedge

accounting are booked directly to the income statement in the year.

Earnings per share The Company did not adopt IFRS 8 -‐ Segment reporting or IAS 33 Earnings per share in these financial

statements, given that they are only mandatory for companies quoted on regulated markets; this

information is provided in the Group consolidated financial statement.

Changes in accounting estimates and errors Some elements in the financial statements cannot be measured accurately and are therefore the objects of

estimates which depend on future uncertain circumstances governing the conduct of the entity’s business.

Over time these estimates will be revised to take account of the data and information that subsequently

become available. The effect of a change in accounting estimates in the financial year in which it has

occurred must be recognised prospectively and included in the income statement of that period and in

future periods if the change also affects these. Prospective recognition of the effects of the changed

estimate means that the change is applied to transactions that take place from the time that the estimate

is changed. Accounting estimates are reviewed or changed if new information comes to hand or if there

are new developments in operations and for these reasons, these do not constitute corrections of errors.

Prior period errors are omissions from, and misstatements in, an entity’s financial statements for one or

more prior periods arising from a failure to use, or a misuse of, reliable information that was available

when the financial statements for those periods were authorized for issue, and could reasonably have

been expected to have been obtained and used in the preparation and presentation of these financial

statements. Such errors include the effects of mathematical mistakes, mistakes in applying accounting

standards, oversights or misinterpretation of facts and fraud. Financial statements do not comply with

IFRSs if they contain either material errors or immaterial errors made intentionally to achieve a particular

presentation of an entity’s statement of financial position, financial performance or cash flows. Potential

current period errors discovered in that period must be corrected before the financial statements are

authorised for issue. Errors discovered in subsequent periods must be corrected in the comparative

information presented in the financial statements for that subsequent period if they are material errors

and the correction is deemed feasible, restating the opening balances of assets, liabilities and equity for

that period. Restatement is not applied and errors are recognised prospectively if the errors and omissions

are considered immaterial.

Omissions or misstatements of items are material if they could, individually or collectively, influence the

economic decisions that the users make on the basis of the financial statements. Materiality depends on

the size and nature of the omission or misstatement judged in the surrounding circumstances.


3. BUSINESS COMBINATIONS

3.1 Demerger of the Telecom Business Unit With accounting, statutory and tax effects from 1 October 2014, a partial demerger took place, which was

proportional and simplified without any share swap ratio, pursuant to Article 2505 of the Italian Civil Code,

as referred to by Article 2506 –ter, last paragraph, of the Italian Civil Code, though the transfer by

Manutencoop Private Sector Solutions S.p.A. of the business unit dedicated to the services provided to the

customer Telecom.

The transfer involved the active contract relationships relating to the services provided, the relations with

the staff employed in the related business, made up of 89 employees and the related liabilities for staff

severance pay and other accrued fees, in addition to other balance sheet asset and liability items, relating

to the Business Unit dedicated to the specific activities.

The facility management services under the transfer, which were previously provided by MPSS S.p.A. all

over Italy, involve the maintenance of technology systems and civil works, environmental hygiene, move-‐

in/out operations, installation of high efficiency lamps, Data Center warehouse operation, in addition to

the operation and maintenance of a cogeneration plant for the production of electricity and cooling

energy.

As at the date of the demerger, the reference financial position of the Telecom Business Unit, which shows

a book value of the transferred equity equal to zero, was made up as follows:

EQUITY AND LIABILITIES EQUITY AND LIABILITIES

Non-‐current assets Non-‐current liabilities Goodwill 4,589 Provisions for employee termination indemnity (1,599) Non-‐current financial assets 1 Provisions for risks and charges, non-‐current (121) Deferred tax assets 696 Deferred tax liabilities (875) Total non-‐current assets 5,287 Total non-‐current liabilities (2,595) Current assets Current liabilities Provisions for risks and charges, current (2,411) Other current liabilities (234) Other current assets 27 Bank borrowings, including current portion of

long-‐term debt, and other financial liabilities (74)

Total current assets 27 Total current liabilities (2,719) Total assets 5,313 Total liabilities and equity (5,313)


4. PROPERTY, PLANT AND EQUIPMENT

The table below shows the changes in property, plant and equipment owned in the year ended 31

December 2014. The historical cost and the value of the depreciation fund, at the beginning and at the end

of the year, are reported at the bottom of the table.

Properties Plant and equipment and

other assets

Properties under lease

Plant and equipment under lease

Total

(in thousands of Euro)

At 1 January 2014, net of accumulated depreciation and impairment

592 12,987 156 204 13,939

Revaluations 0 Increases 998 998 Impairment losses (23) (23) Disposals (34) (464) (499) Depreciation for the period (49) (3,114) (9) (58) (3,229) Reclassifications 41 (42) 0 At 31 December 2014, net of accumulated depreciation and impairment

485 10,447 147 106 11,186


Cost 2,472 57,129 284 643 60,528 Accumulated depreciation and impairment losses (1,881) (44,142) (128) (439) (46,590) NET BOOK VALUE 592 12,987 156 204 13,939 At 31 December 2014 Cost 2,240 56,416 284 397 59,338 Accumulated depreciation and impairment losses (1,755) (45,969) (137) (291) (48,152) NET BOOK VALUE 485 10,447 147 106 11,186

The increases in the year mainly refer to the purchase of vehicles and equipment used for cleaning and

sanitation services as well as investments made in plants.

There are no fixed assets which have been subject to revaluations in the current financial year or in

previous years.

The decreases for the year, totalling € 499 thousand, mainly relate to the sale of a cogeneration plant thus

achieving a capital loss of € 50 thousand.


The table below shows the movements in property plant and equipment owned in the year ended 31

December 2013; the historical cost and the value of the depreciation fund, at the beginning and at the end

of the year, are reported at the bottom of the table.

(in thousands of Euro) Properties Plant and equipment and

other assets

Properties under lease

Plant and equipment under lease

Total


842 15,337 165 323 16,666

Additions due to business combinations Revaluations 0 Increases 965 965 Decreases from transfers or contributions (14) (14) Impairment losses 0 Disposals (116) (1) (117) Depreciation for the period (236) (3,257) (9) (117) (3,619) Reclassifications 57 57 Rounding off 1 1 At 31 December 2013, net of accumulated depreciation and impairment

592 12,987 156 204 13,939

At 1 January 2013 Cost 2,903 57,355 284 2,536 63,078 Accumulated depreciation and impairment losses (2,061) (42,018) (119) (2,213) (46,412) NET BOOK VALUE 842 15,337 165 323 16,666 At 31 December 2013 Cost 2,472 57,129 284 643 60,528 Accumulated depreciation and impairment losses (1,881) (44,142) (128) (439) (46,590) NET BOOK VALUE 592 12,987 156 204 13,939


5. INTANGIBLE ASSETS

The table below shows the changes in intangible assets in the year ended 31 December 2014. The

historical cost and the value of the amortization fund, at the beginning and at the end of the year, are

reported at the bottom of the table.

(in thousands of Euro) Other intangible assets Goodwill Total

At 1 January 2014, net of accumulated amortisation and impairment losses

22,977 288,649 311,626

Increases 8,925 4,589 13,514 Impairment losses (4,418) (4,418) Disposals (5) (5) Rounding off 0 Amortization (5,791) (5,791) At 31 December 2014 21,688 293,238 314,926 At 1 January 2014 Cost (gross book value) as previously reported 70,327 346,126 416,453 Accumulated amortization and impairment losses as previously reported

(47,350) (57,477) (104,827)

NET BOOK VALUE 22,977 288,649 311,626 At 31 December 2014 Cost (gross book value) 74,829 350,715 425,544 Accumulated amortization and impairment losses (53,141) (57,477) (110,618) NET BOOK VALUE 21,688 293,238 314,926

Other intangible assets, amounting to € 21,688 thousand at 31 December 2014, mainly consist of

investments in software carried out as part of the projects aimed at upgrading and enhancing the

corporate information systems. The additions from acquisitions for the year (€ 8,925 thousand) were

attributable almost entirely to the investments in software used in the corporate IT systems.

The backlog entered under other intangible assets amounted to € 3,831 thousand at 31 December 2014.

Their value is equal to the historical cost of backlog, net of accumulated amortization.

Software purchase costs are amortised on a straight line basis over their expected useful life of 5 years.

Trademarks and patents are amortised on a straight line basis over their expected useful life of 5 years.

At 31 December 2014 goodwill amounted to € 293,238 thousand, against € 288,649 thousand in the

previous year. The increase for the year was due to the Demerger of the Telecom Business Unit, as

described in paragraph 3. Goodwill is tested for impairment on an annual basis, as described in paragraph

6 below.

In 2014 the portion of amortization of intangible assets amounted to € 5,791, compared to € 6,205

thousand in the previous year.

Finally, the year saw the recognition of impairment losses of € 4,418 thousand, mainly linked to the write-‐

off of the net residual value of software projects capitalised in previous years which, after careful analysis,

proved to be no longer suitable to be used for company business purposes because they were no longer

utilised or had been superseded by more innovative projects.


The table below shows the changes that occurred in intangible assets in the year ended 31 December

2013. The historical cost and the value of the amortization fund, at the beginning and at the end of the

year, are reported at the bottom of the table.

(in thousands of Euro) Other intangible assets Goodwill Total

At 1 January 2013, net of accumulated amortization and impairment

20,551 288,649 309,201

Increases 8,687 8,687 Impairment losses Disposals (56) (56) Rounding off Amortization (6,205) (6,205) At 31 December 2013 22,977 288,649 311,626 At 1 January 2013 Cost (gross book value) as previously reported 61,701 346,126 407,827 Accumulated amortization and impairment losses as previously reported

(41,150) (57,477) (98,627)

NET BOOK VALUE 20,551 288,649 309,201 At 31 December 2013 Cost (gross book value) 70,327 346,126 416,453 Accumulated amortization and impairment losses (47,350) (57,477) (104,827) NET BOOK VALUE 22,977 288,649 311,626

6. IMPAIRMENT TEST OF GOODWILL

At 31 December 2014 goodwill amounted € 293,239 thousand, against a value of € 288,649 thousand at

the end of the previous year.

As set out in accounting standard no. 36 (“IAS 36”) regarding the impairment testing of balance sheet

assets, the Company arranged for an analysis of the recoverability of the goodwill recorded through

business plans in order to identify any indications of impairment loss. Goodwill is subject to impairment

testing on an annual basis or more frequently if there are indications that the asset may have suffered an

impairment loss.

For the purpose of impairment tests on assets, company management identified beforehand the operating

units to which the “Cash Generating Units” (“CGU”) correspond, on the basis of the type of services

offered.

The identification of the Facility Management CGU carried out is fully consistent with the requirements set

forth in IAS 36 itself, which requires the impairment test calculations used to be consistent with the

reports used by the key decision makers in order to monitor the company performances and determine

future development strategies.


The impairment test on the value of goodwill allocated to the facility management CGU was carried out

through the comparison between the net book value and the recoverable value of the individual

CGUs/SBUs to which goodwill had been allocated, as determined on the basis of the discounting-‐back of

expected future cash flows relating to the period 2015-‐2019 extrapolated from the Business Plan of the

Manutencoop Group.

The business plan used for the analyses described in these notes was approved by the Management Board

of Manutencoop Facility Management S.p.A. on 23 February 2015.

The estimated value in use is based on the following assumptions:

› the expected future cash flows for the period 2015-‐2017, as already specified, were extrapolated from

the Business Plan. The main assumptions on which Management based cash flow projections for the

purpose of impairment test of goodwill are:

• Determination of the value of the forecast gross margins according to the projection of the

backlog of existing service contracts, augmented by the assumption of new portfolio

acquisitions.

• Changes in net working capital estimated on the basis of the target days of stock rotation,

the payment of amounts due and collection of receivables.

› a terminal value used to estimate future results beyond the time horizon expressly considered. The

terminal value was determined by applying a NOPAT based on 2019 EBIT, net of a nominal tax rate. As

regards long-‐term growth rates, a steady assumption of 1% has been considered.

› the expected future cash flows were discounted back at a discount rate (WACC) of 7.35% (2013:

7.92%). The WACC was determined by using the Capital Asset Pricing Model (“CAPM”), by which the

risk-‐free rate was calculated with reference to the curve of the rates of return of Italian long-‐term

government bonds, while the non-‐diversifiable systematic risk ratio (βeta) and the debt/equity ratio

were extrapolated from the analysis of a group of comparable companies operating in the European

facility management. Furthermore, in order to reflect the uncertainty of the current economy and the

future market conditions, the cost of the equity component of the WACC rate was increased with a

risk premium of 100 basis points in each period of time.

The analysis confirmed that the recoverable value of Facility Management CGU exceeds the associated

carrying amount, therefore not requiring any write-‐downs.

On a prudential basis, a “Worst Case” was outlined with reference to the WACC and to the growth rates

applied. In simulating nil growth rates (equal to 0%), also in combination with a WACC exceeding those

applied by a percentage point (and, then, equal to 8.35%) there would be no need to make write-‐downs in

both CGUs/SBUs, as the recoverable value would exceed the related book value.


7. INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

The Company directly holds some equity investments in subsidiaries, joint ventures and associates which

are valued at cost in the financial statements.

With respect to subsidiaries, joint ventures and associates, the table below summarises, the information

regarding the name, registered office and the amount of share capital held, corresponding to the

percentage of votes held at shareholders’ meetings.

SUBSIDIARIES Registered office Share Capital Held

Logistica Sud Est Soc. Cons. a r.l. Zola Predosa (BO) 60% MCF Servizi Integrati Soc. Cons. a r.l. Zola Predosa (BO) 60% Servizi Brindisi Soc.Cons. a r.l. Zola Predosa (BO) 52% Gestlotto 6 Soc.Cons. a r..l. Zola Predosa (BO) 55% Simagest 2 Soc.Cons. a r.l. Zola Predosa (BO) 90% Consorzio Imolese Pulizie Soc.Cons. a r.l. Imola (BO) 60% Consorzio Servizi Toscana Soc.Cons. a r.l. Zola Predosa (BO) 60% Servizi Marche Soc.Cons. a r.l. in liquidation Zola Predosa (BO) 60% Palmanova servizi energetici Soc.Cons. a r.l. Zola Predosa (BO) 60% Servizi l’Aquila Soc.Cons. a r.l. Zola Predosa (BO) 60% Consorzio Igiene Ospedaliera Soc.Cons. a r.l. Zola Predosa (BO) 67% Gymnasium Soc.Cons. a r.l. Zola Predosa (BO) 68% Manutencoop Private Sector Solutions S.p.A. Zola Predosa (BO) 100% Co.Ge.F. Soc.Cons. a r.l. Zola Predosa (BO) 80% Simagest 3 Soc.Cons. a r.l. Zola Predosa (BO) 90% Alisei S.r.l. Zola Predosa (BO) 100% Servizi Ospedalieri S.p.A. Ferrara (FE) 100% Manutenzione Installazione Ascensori S.p.A. Modena (MO) 100% Società Manutenzione Illuminazione S.p.A. Zola Predosa (BO) 100% MACO S.p.A. Zola Predosa (BO) 100% Sicura S.p.A. Vicenza (VI) 80% Ferraria Soc. Cons. a r.l. Zola Predosa (BO) 69% S.AN.GE Soc. Cons. a r.l. Milan (MI) 89% Consorzio Sermagest Servizi Manutentivi Gestionali in liquidation

Rome (RM) 60%

S.AN.CO. Soc. Conso a r.l. Milan (MI) 52% Telepost S.p.A. Zola Predosa (BO) 100% ISOM Gestione Soc. Cons. a r.l. Zola Predosa (BO) 53% Servizi Taranto Soc. Cons. a r.l. Taranto (TA) 60% ISOM Lavori Soc. Cons. a r.l. Zola Predosa (BO) 63% Kanarind Soc. Cons. a r.l. Zola Predosa (BO) 62% Global Oltremare Soc. Cons. a r.l. Zola Predosa (BO) 60%

JOINT VENTURES Registered Office Share Capital Held

CO. & MA. Società Consortile a r.l. Tremestieri Etneo (CT) 50% Consorzio Leader Soc.Cons. a r.l. Zola Predosa (BO) 50% Legnago 2001 Soc.Cons. a r.l. Zola Predosa (BO) 50% Servizi Sportivi Brindisi Soc. Cons. a r.l. Rome 50% Malaspina Energy Soc. Cons. a r.l. Milan 50% DUC Gestione Sede Unica Soc.Cons. a r.l. Zola Predosa (Bo) 49% Cardarelli Soc. Cons. a r. l. Carinaro (CE) 60%


ASSOCIATES Registered Office Share Capital Held

UFS -‐ United Facility Solutions Brussels 33% Savia Soc. Cons. a r.l. Forlì (FC) 49% Gico Systems S.r.l. Zola Predosa (BO) 20% Como Energia Soc.Cons. a r.l. Como 30% Se.Sa.Mo. S.p.A. Carpi (Mo) 21% Global Riviera Soc.Cons. a r.l. Zola Predosa (Bo) 23% Newco DUC Bologna S.p.A. Bologna 25% PBS Soc.Cons. a r.l. Milan 25% Bologna Più Soc.Cons. a r.l. Bologna 26% Global Provincia di Rimini Soc.Cons. a r.l. in liquidation Zola Predosa (Bo) 42% Roma Multiservizi S.p.A. Rome 45% Global Vicenza soc.cons. a r.l. Concordia sulla Secchia

(MO) 41%

Bologna Multiservizi soc.cons. a r.l. Casalecchio di Reno (BO)

39%

Livia Soc. Cons. a r.l. Zola Predosa (Bo) 34% Bologna Gestione Patrimonio Soc. Cons. a r.l. Bologna 28% Servizi Napoli 5 Soc. Cons. a r.l. Zola Predosa (Bo) 45% Costruzione Manutenzione Immobili S.r.l. in liquidation Bologna 40% Progetto Nuovo Sant'Anna S.r.l. Milan 24% Logistica Ospedaliera Soc. Cons a r.l. Caltanissetta (CL) 45% Synchron Nuovo San Gerardo S.p.A. Zola Predosa (Bo) 26% Grid Modena S.r.l. Modena 23% Progetto ISOM S.p.A. Zola Predosa (BO) 37%


The statement of changes in equity investments in Subsidiaries, joint ventures and Associates during the

year is provided below:

SUBSIDIARIES (in thousands of Euro)

Balance as at 01/01/2014

Increase Decrease/ write-‐down

Reclassification Balance as at 31/12/2014

Servizi Marche s.cons.r.l. 6 6 Consorzio Imolese Pulizie s.cons.r.l. 6 6 Kanarind Soc. Cons. a r.l. 6 6 Servizi Ospedalieri S.p.A. 80,570 80,570 S.I.MA.GEST2 s.cons.r.l. in liquidation 45 45 S.I.MA.GEST3 s.cons.r.l. in liquidation 45 45 Consorzio Servizi Toscana s.cons.r.l. 6 6 Gymnasium s.cons.r.l. 7 7 Gestlotto6 soc.cons.r.l. 50 50 Servizi Brindisi s.cons. a r.l. 5 5 Co.Ge.F. s. cons. a r.l. 8 8 Palmanova servizi energetici s. cons. a r.l. 6 6 Servizi l’Aquila s.cons.r.l. 12 12 Società Manutenzione Illuminazione S.p.A. 161 2,300 (2,172) 289 Manutenzione Installazione Ascensori S.p.A. 8,788 6,212 (15,000) 0 Sicura S.p.A. 32,866 32,866 Consorzio Sermagest Servizi Manutentivi Gestionali 0 0 MACO S p.A. 84 1,035 (828) 291 Consorzio Igiene Ospedaliera s. cons. a r.l. 7 7 Alisei S.r.l. 0 0 Manutencoop Private Sector Solutions S.p.A. 12,771 12,771 Telepost S.p.A. 7,299 7,299 S.AN.CO. Soc. Cons. a r.l. 5 5 S.AN.GE Soc. Cons. a r.l. 9 9 Servizi Taranto Soc. Cons. a r.l. 6 6 Isom Gestione Soc. Cons. a r.l. 5 5 Global Oltremare Soc. Cons. a r.l. 6 6 Isom Lavori Soc. Cons. a r.l. 6 6 MCF Servizi Integrati Soc. Cons. a r.l. 6 6 Logistica Sud Est Soc. Cons. a r.l. 6 6 Ferraria Soc. Cons. a r.l. 0 7 7

TOTAL SUBSIDIARIES 142,797 9,554 (18,000) 0 134,351


JOINT-‐VENTURES (in thousands of Euro)




CO. & MA. Società Consortile a r.l. 5 5 Cardarelli Soc. Cons. a r. l. 6 6 Consorzio Leader Soc. Cons. a.r.l. 5 5 Legnago 2001 Soc. Cons a r.l. 5 5 Servizi Sportivi Brindisi Soc. Cons. a r.l. 5 5 Duc Dest sede unica Soc. Cons.a r.l. 10 10 Malaspina Energy Soc. Cons. a r.l. 50 50

TOTAL JOINT-‐VENTURES 86 0 0 86

ASSOCIATES (in thousands of Euro )




Roma Multiservizi S.p.A. 3,324 3,324 Global Prov.Rimini Soc. Cons. a r.l. 4 4 Gico Systems S.r.l. 29 29 Bologna più Soc. Cons. a r.l. 5 5 Como Energia Soc. Cons. a r.l. 78 78 Global Riviera Soc. Cons. a r.l. 7 7 Newco Duc Bologna S.p.A. 1,004 1,004 Sesamo S.p.A. 606 606 P.B.S. Soc. Cons.a r.l. 25 25 Global Vicenza Soc.Cons. a r.l. 4 4 Bologna Multiservizi Soc. Cons.a r.l. 4 4 Bologna Gestione Patrimonio Soc. Cons. a r.l. 6 6 Servizi Napoli 5 Soc. Cons. a r.l. 5 5 Costruzione Manutenzione Immobili S.r.l 62 62 Livia Soc. Cons. a r.l. 3 3 Progetto Nuovo Sant'Anna S.r.l. 1,043 1,043 Perimetro Gestione Proprietà Immobiliari Soc. Cons. p. A.

1,111 (1,111) 0

Savia Soc.Cons. a r.l. 5 5 Progetto Isom S.p.A. 2,420 2,420 GRID MODENA SRL 23 23 Logistica Ospedaliera Soc. Cons a r.l. 5 5 Synchron Nuovo San Gerardo S.p.A. 2,135 2,135 UFS -‐ United Facility Solutions 103 (103) 0 Total associates 12,009 0 (1,214) 0 10,795

TOTAL SUBSIDIARIES, JOINT-‐VENTURES, ASSOCIATES 154,892 9,554 (19,214) 0 145,232


The main changes which occurred during the year are as follows:

Società Manutenzione Illuminazione S.p.A. The increase of € 2,300 thousand refers to capital contribution payment in made in May and November

2014.

Decrease, equal to € 2,171 thousand, regards the write-‐down of the investment made in 2014 in order to

bring its book value into line with that of the shareholders’ equity and as a consequence of continuing

losses.

MIA S.p.A. The transfer of the total quota held in MIA S.p.A. (the sub-‐holding company of the related group of

companies operating in the market of lifting equipment installation and maintenance) took place on 30

December 2014. The transfer agreement provided for the definition of a preliminary price of the

investment, in addition to the full repayment of the intragroup loan, which was outstanding, as at that

date, between the transferred company and the Company. On the closing date the buyer followed up the

payment, totalling € 60,405 thousand, in connection with the repayment of the intragroup loan and a

portion of the preliminary consideration relating to the transfer of the equity, while a portion of the

transfer price (€ 10 million) was paid by the buyer into an escrow account, as security for the future

commitments entered into by the parties. According to the transfer agreement, the price set before

closing will be adjusted according to specific contractual provisions. The management included an estimate

of this price adjustment, made on the basis of the information to hand at the time, in the financial

statements at 31 December 2014.

Gruppo Sicura S.r.l. At the end of 2008 the acquisition of an 80% stake in Gruppo Sicura S.r.l. was acquired, a company also

operating as a holding company for a group of companies operating mainly in the fire safety services

sector, as well as the surveillance and security sectors.

The consideration for the purchase of the shareholding, equal to € 15,329 thousand, was paid to the

transferors on the date of completion of the transaction.

The contract also makes provision for:

› the payment of an earn-‐out to transferors, for the 80% share purchased, to be paid between 1 July

2014 and 30 June 2015, when requested by said sellers, upon satisfaction of the condition that the

consolidated normalised EBITDA of Gruppo Sicura for 2013 is higher than the normalised value in

2007;

› the cross issue of a put option (from buyer to transferors, exercisable between 30 June 2014 and 30

June 2015) and a call option (from transferors to the buyer, exercisable between 1 July 2015 and 1

July 2017) for the sale of a further 20% of share capital.

The strike price of the options on the remaining 20% of the capital will be calculated on the basis of the

valuation of the investment, updated, on the option exercise date.

The financial year saw the payment of the earn-‐out due to minority shareholders, equal to € 11 million.


Energyproject S.r.l. On 3 February 2014 an agreement was reached for the transfer of the total quotas of the subsidiary

Energyproject S.r.l, which was completed in 2013 and recognised in the 2013 annual accounts under the

item of “non-‐current assets held for sale”. The agreement for the transfer of the quota held provided for

the procedures to repay the loan granted by MFM S.p.A. to the same company, equal to € 4,155 thousand

as at the date of execution of the agreement. A portion of the same was collected at the same time as the

transfer of the capital quotas (€ 1,900 thousand) and subsequently for additional € 1,394 thousand, while

the residual portion will be collected in the course of the next finance year.

Maco S.p.A. Increases of € 1,035 thousand for the capital contribution payment made during the year.

Decrease, equal to € 828 thousand, relates to the write-‐down of the investment made in 2014 in order to

bring its value into line with shareholders’ equity and as a consequence of continuing losses.

Ferraria Soc. Cons. a r.l. 18 December 2014 saw the incorporation of “Ferraria Società Consolrtile a r.l.”, with registered office at

Via Poli no. 4 in Zola Predosa (Bologna), concerning the global maintenance multi-‐service and energy

services for the properties pertaining to the USL Local Health Unit in Ferrara.”; the same was registered

with the Bologna Register of Companies on 23 December 2014.

UFS – United Facility Solutions The decrease, equal to € 103 thousand, relates to the write-‐down applied in the 2014 financial year in

order to bring the value of the investment into line with the realisable value; the investment was sold in

February 2015.

Perimetro Gestione Proprietà Immobiliari Soc. Cons. p. A. On 15 April 2014 the Company transferred 26,793 Class A shares issued by Perimetro Gestione Proprietà

Immobiliari ScpA (equal to 20.10%) for a nominal value of € 27 thousand.


8. OTHER INVESTMENTS


Other investments 2,718 2,504

TOTAL 2,718 2,504

Investments in companies in which the Company has no significant or controlling interests were acquired

for strategic/production purposes; indeed, these investments are all related to production sites and also

mostly regard investments in consortia for cost charge-‐back. This item was valued at purchase or

establishment cost since there is no active market in these securities, which for the most part cannot be

freely transferred to third parties due to limitations and covenants preventing their free circulation. In any

case, this valuation method provides an adequate measure of the security’s fair value.

The change, with respect to the previous year, mainly derives from the increase of € 214 thousand, due to

the recapitalisation of the investment held in Arena Sanità S.p.A..

9. NON-‐CURRENT FINANCIAL ASSETS

(values in thousands of Euro) 31 December 2014 31 December 2013

Non-‐current financial assets 66,964 59,568

TOTAL 66,964 59,568

The balance is mainly composed of loans granted to associate and affiliate companies. In certain cases

non-‐interest bearing loans were granted, and then discounted on the basis of their expected residual term,

applying as the reference interest rate the IRS relating to loans with a term of more than 12 months, and

the Euribor for loans with a term of less than 12 months, plus a market spread valued at the moment of

calculation of the discount.

The nominal value of non-‐interest bearing amounts at year-‐end amounted to € 3,291 thousand, while the

discount fund amounted to € 505 thousand.

The change compared to the previous financial year is mainly attributable to the transfer of the MIA

investment, which gave rise to a financial receivable for € 10 million, which was paid by the purchaser into

an escrow account, to secure the future commitments undertaken by the parties, net of a reduction due to

the repayment of the shareholders’ loan equal to € 2 million.


10. OTHER NON-‐CURRENT ASSETS


Other receivables and non-‐current assets 1,429 1,275

TOTAL 1,429 1,275

Other non-‐current assets mainly consist of security deposits related to certain commercial contracts, of

prepaid expenses on long-‐term insurance policies and loans granted to employees.

11. INVENTORIES


Raw materials and consumable 1,172 1,514

TOTAL 1,172 1,514

The final inventory of raw materials is composed of materials present in the warehouses, while waiting to

be used at work sites, valued at the average weighted purchase cost and stocks of fuel in tanks belonging

to customers that entrusted the Company with heat management.


12. TRADE RECEIVABLES, ADVANCES TO SUPPLIERS

Trade receivables net of discount and depreciation funds are broken down as follows:


Trade receivables, gross 367,774 414,653 Provision for the discounting of trade receivables 0 (113) Allowance for doubtful accounts (19,949) (19,464) Advances to suppliers 1,144 3,360 Trade receivables due from third parties 348,969 398,437 Inventories of contract work in progress 18,719 17,129

Contract work in progress 18,719 17,129 Trade receivables from parent companies 113 56

Trade receivables from subsidiaries 47,829 84,144 Trade receivables from joint ventures 7,221 8,544 Trade receivables from associates 13,166 12,679 Trade receivables from affiliates 28 91 Trade receivables due from Related parties 68,356 105,513 Trade receivables and advances to suppliers 436,044 521,080

The balance of trade receivables and advances to suppliers, which also includes inventories of contract

work in progress, amounted to € 436,044 thousand as at 31 December 2014, showing a decrease of €

85,036 thousand compared to the amount of € 521,080 thousand recorded as at 31 December 2013.

The change is mainly due to the decrease in gross trade receivables, which amounted to € 367,774

thousand at 31 December 2014 (31 December 2013: € 414,653 thousand), against the related adjustment

provisions that showed a balance of € 19,949 thousand at 31 December 2014 (31 December 2013: €

19,464 thousand).

Furthermore, in the course of 2014, the Group entered into an agreement for the repurchase of the trade

receivables assigned to Banca IMI in previous financial years and not yet collected by the factor, for an

initial overall cost of € 8,529 thousand. The balance of these receivables has been recognised at the

purchase value under “trade receivables”, while the balance of the items not yet collected at 31 December

2014 was equal to € 5,722 thousand.

Trade receivables generally have contractual maturities of between 30 and 90 days. Given that most of the

customers are either Public Authorities, Local Authorities, Local Health Authorities and Hospitals, who are

notorious for payment delays, a provision was created, in the past, for the discounting of trade receivables

at a risk-‐free discount rate depending on the bracket of the past due receivable for the period elapsed

between the average number of days of delayed payment of the main competitors and that of the

company identified during the year.


Changes in the provision for discounting of trade receivables in 2014 are shown below:

31 December 2013 Provisions Releases 31 December 2014

Provision for discounting of trade receivables

113 0 (113) 0

The total decrease in the provision for discounting receivables is due to the amounts freed from provisions

allocated by the Company, since collections are now in line with market practice after the substantial

improvement in average sale days outstanding and to the persistence of low reference interest rates; for

these reasons, the discounting impact is no longer judged to be significant.

With respect to non-‐performing receivables which are difficult to fully recover, a specific write-‐down

provision was set aside, amounting to € 19,949 thousand at 31 December 2014 (at 31 December 2013: €

19,464 thousand) deemed suitable with respect to known disputes at the balance sheet date.

(in thousands of Euro) 31 December 2013 Increases Other provisions

Utilisations Releases Reclass. 31 December 2014

Allowance for doubtful accounts -‐Customers

19,464 1,598 151 (1,814) (9) 559 19,949

Provisions include those for default interest set aside in the year for € 151 thousand (€ 200 thousand at 31

December 2013). This provision is charged to the income statement as a direct deduction of income for

penalty interest.

For details on the terms and conditions relating to receivables from related parties, reference should be

made to note 36.

The table below shows the analysis of trade receivables due from third parties net of the write-‐down

provision and including the provision for discounting in place as at 31 December 2014:

(in thousands of Euro) Total Trade receivables reaching maturity

Overdue trade receivables

< 30 days 30 -‐ 60 days

60 -‐ 90 days

90 -‐ 120 days

after 120 days

31. December 2014 347,825 241,997 22,052 15,564 3,716 3,765 60,731 31. December 2013 395,190 260,734 31,426 21,397 11,689 13,903 56,040

On the basis of the historical performance of the debtors involved in the transfer, the incidence of the

credit risk is extremely low, while the risk of delayed payment is higher given that said receivables are

predominantly due from Public Authorities.

In 2014, no assignments of trade receivables without recourse took place after the gradual abandonment

of revolving programmes for the assignment of trade receivables without recourse to Crédit Agricole

Corporate & Investment Bank and to Intesa San Paolo.


13. OTHER CURRENT ASSETS


Receivables due from employees 536 391 Advances to supplier 1,005 614 Due from social security institutions 1,685 501 Due from parent company 9 10 Due from subsidiaries 196 267 Due from INPDAP 2,176 2,176 Due from INAIL 634 510 VAT credits due from tax authorities 2,061 550 Miscellaneous 9,652 12,473 Due from tax authorities 1,916 1,925

TOTAL OTHER CURRENT ASSETS 19,870 19,419

The amount of € 2,176 thousand refers to the balance of current accounts held at Banca di Roma managed

in the name and on behalf of INPDAP (Social Security Institution for employees in public administration), as

provided for in a commercial contract stipulated with the aforementioned authority by the company

B.S.M. S.r.l., merged in 2006.

It should be noted that the item “Miscellaneous” includes a provision for doubtful accounts, which was

recognised in previous years (€ 595 thousand), taken as a direct reduction in the item. This provision was

allocated following an analysis of the individual receivables, also taking into account maturity and

recoverability.


14. CURRENT FINANCIAL ASSETS


Global Prov. Rimini Soc. Cons. a r.l. 70 170 Consorzio Imolese Pulizie Soc.cons.r.l. 36 36 Gymnasium Soc.cons.r.l. 7 7 Gestlotto6 Soc.cons.r.l. 20 20 Bologna Più Soc. Cons. r.l. 39 39 Intercompany receivables from companies in liquidation 172 272 CO.VE.DI. S.r.l. 0 0 Società Manutenzione Illuminazione S.p.A. 12,152 9,209 Maco SpA 1,896 2,279 Manutenzione Installazione Ascensori S.p.A. 0 32,197 SERVIZI OSPEDALIERI SpA 14,542 32,130 Consorzio Igiene Ospedaliera Soc.cons.r.l. 1 1 Energy Project S.p.A. 0 4,715 S.AN.GE Soc. Cons. a r.l. 3,734 3,729 Sesamo S.p.A. 33 0 Sicura S.p.A. 3 0 Receivables from intercompany financial current accounts 32,362 84,260 Manutenzione Installazione Ascensori S.p.A. 0 1,135

SERVIZI OSPEDALIERI SpA 2,515 595 Manutencoop Private Sector Solutions S.p.A. 1,317 24 Receivables for interest on intercompany loans 3,832 1,754 Gruppo Sicura S.p.A. 800 800

CO.VE.DI. S.r.l. 0 61 Karabak 2 0 Dividends to be collected 802 861 Receivables from others 961 115 Lien on Intesa Securitization 0 8,834 Receivable for transfer of the IT systems business unit 0 439

TOTAL CURRENT FINANCIAL ASSETS 38,129 96,535

Current accounts opened with Group Companies are mainly classified in this item, in which financial

relations and receivables resulting from the sales of business units are settled. The balance in these

accounts accrues interest at the 3-‐month Euribor plus a spread; it is repayable on demand and the financial

current account contract expires at the end of the financial year, except where tacitly renewed.

Total current financial assets came to € 38,129 thousand. The change during the year is essentially due to:

› A decrease in intercompany loans to MIA S.p.A. which was transferred during the year, as described in

paragraph 7;

› A decrease in the balance of pledged current accounts related to the collection service of the

receivables assigned without recourse to Intesa San Paolo (€ 8,834 thousand). These accounts were

released in 2014 after the already described exit from the previously existing assignment programme;

› A reduction in the balance of the intercompany financial current account held with subsidiary Servizi

Ospedalieri S.p.A.;


› An increase in receivables due from Group companies for interest accrued on the subordinated loans

granted to the subsidiaries Servizi Ospedalieri S.p.A. and Manutencoop Private Sector Solutions S.p.A.

as described in note 9.

15. CASH AND CASH EQUIVALENTS


Bank deposits on demand and cash on hand 87,823 138,470 Deposit with consortia 4,818 11,365

TOTAL CASH AND CASH EQUIVALENTS 92,641 149,834

Bank deposits accrue interest at the respective short-‐term interest rates. Amounts deposited at Consorzio

Cooperativo Finanziario Per Lo Sviluppo (C.C.F.S.) and Consorzio Nazionale Servizi (C.N.S.), included in the

item ”Deposit with consortia”, also have the nature of available current accounts and accrue interest.

The fair value of cash and cash equivalents is therefore € 92,641 thousand (2013: € 149,834 thousand).

Amounts deposited at Consorzio Cooperativo Finanziario Per Lo Sviluppo (C.C.F.S.) and Consorzio

Cooperative Costruzioni (C.C.C.), which constitute a part of the balance of deposit with Consortia have the

nature of deposit on demand and accrue interest.

16. SHARE CAPITAL AND RESERVES

2014 2013

Share Capital -‐ Ordinary Shares 109,150 109,150

Ordinary shares have a nominal value of Euro 1 each.

Ordinary shares issued and fully paid up at 31 December 2014 amounted to 109,149,600.

The Company does not hold own shares.


Reserves and Retained Earnings The table below shows changes in shareholders’ equity reserves.

(in thousands of Euro) Share premium reserve

Legal Reserve Other reserves TOTAL RESERVES

Retained profits/losses

At 31 December 2012 145,018 16,157 23,188 184,363 3,809 2012 Allocation of profits 1,312 24,933 26,246 0 Total comprehensive profit/(loss) 1,252 1,252 0 Other transactions (78) (78) 0 Al 31 December 2013 145,018 17,469 49,295 211,782 3,809 2013 Allocation of profits 267 5,082 5,350 0 Total comprehensive profit/(loss) (663) (663) 0 At 31 December 2014 145,018 17,736 53,714 216,469 3,809

It should be noted that:

› Other Reserves rise in relation to the allocation of profit from the previous year, for € 5,350 thousand;

› Total comprehensive profit/(loss) amounting to € 663 thousand includes actuarial losses for € 914

thousand, already net of tax effect.

Nature and purpose of other reserves

NATURE/DESCRIPTION (in thousands of Euro)

Summary of utilization in 3 previous years

Amount Possibility of use

Amount available

For covering losses

For other reasons

Share Capital 109,150 Share Capital reserve: • Share premium reserve 145,018 A,B,C Profit reserves: • Legal Reserve 17,736 B 17,736 • Extraordinary Reserve 60,944 B,C 60,944 • Other reserves (7,229) • Profits/-‐Losses carried forward 3,809 B,C 3,809 TOTAL 329,428 Non-‐distributable portion 126,886 Remaining distributable portion 202,541

KEY Possibility of use: A: for share capital increase B: to cover losses C: for distribution to shareholders


17. EMPLOYEE TERMINATION INDEMNITY (TFR)

The company has no proper defined benefit pension plans.

However, the ESI provision set forth by art. 2120 of the Civil Code, from the point of view of recognition in

the financial statements falls under the defined benefit plans category and, as such, has been accounted

for, as illustrated in the accounting standards applied.

The tables below summarise the components of net cost of the benefit recorded in the income statement

and the amounts recognised in the equity accounts in relation to employee termination indemnity.

Details of the net cost of the benefit, included in personnel costs, are shown below.


Curtailment (78) 0 Interest expenses on benefit obligation 448 434 Net cost of the benefit recognized through profit or loss 370 434 Net actuarial (gains)/ losses recognized in equity 914 (504)

TOTAL NET BENEFIT COST 1,284 (70)

The financial costs of the obligation, social security costs and the curtailment are accounted for under

personnel costs, while actuarial gains and losses are entered, as already specified, directly under an equity

reserve.

Changes in the present value of the obligation for defined benefits (ESI) are as follows:


Opening balance of the present value of the defined benefit obligation 14,162 15,710

Increases/ (decreases) for personnel acquired in the business combinations 1,599 150 Increases/ (decreases) for transfer (55) 95 Benefits paid (4,638) (1,723) Curtailment (78) 0 Interest expenses on benefit obligation 448 434 Net actuarial gains (losses) recognised in the year 914 (504)

CLOSING BALANCE OF THE PRESENT VALUE OF THE DEFINED BENEFIT OBLIGATION

12,352 14,162


The main assumptions used in determining the obligation relating to employee termination indemnity are

illustrated below:

% 2014 % 2013

Discount rate 1.60% 3.30% Inflation rate 1.50% 2.00% Turnover 1.50% before the age of 50

11.50% after the age of 50 1.50% before the age of 50 11.50% after the age of 50

The discount rates used to assess the ESI obligation are defined on the basis of curves of rates of return of

high-‐quality fixed-‐interest securities, the amounts and maturity dates of which correspond to the amounts

and maturity dates of the payments of expected future benefits. In 2014 the discount rate was equal to

1.6% (2013: 3.3%).

The estimated turnover rate varies according to the age of the participant in the plan, which is assumed as

an average data on the basis of the composition of the population.

The effects on the ESI obligation from the increasing or decreasing measurement of the financial rates in

relation to reasonably possible changes in interests rates and in the assumptions of average duration of

the working population, while maintaining all the other variables unchanged, are illustrated below.

Discount rate Actuarial

assumptions

Employee termination indemnity

Financial year ended 31 December 2014 + 0.25 bps + 0.06 pps 12,066 -‐ 0.25 bps -‐ 0.06 pps 12,650

Financial year ended 31 December 2013 + 0.25 bps + 0.08 pps 13,874 -‐ 0.25 bps -‐ 0.08 pps 14,459

Below are reported the data relating to the average number of the Company’s employees and of the

workers provided to the Company by Manutencoop Società Cooperativa:

2014 2013

Executives 43 42 Office workers 972 863 Manual workers 13,272 12,223

EMPLOYEES 14,287 13,128

In 2014, the average number of leased personnel employed, including those shown in the table, stood at

533 (2013: 544).


18. PROVISIONS FOR RISKS AND CHARGES

The breakdown of the provisions for risks and charges in 2014 is shown below.

(in thousands of Euro) Risks on

job orders

Pending disputes

Bonuses for employees

Investment risks

Corporate reconstruc.

Tax disputes

Employee legal proceedings

Other provisions

Total

At 1 January 2014 10,934 3,022 3,485 60 150 971 2,804 447 21,874 Provisions 803 375 426 4,617 54 1,933 8,208 Utilization (1,851) (38) (2,002) (448) (340) (686) (305) (5,670) Unused and reversed (1,471) (18) (126) (718) (93) (2,426) Other (3,228) 2,664 2,411 121 1,968 At 31 December 2014 5,187 3,341 1,783 2,724 6,730 685 3,454 49 23,954 Current 2014 4,830 339 1,097 2,724 6,730 685 49 16,455 Non-‐current 2014 357 3002 686 3,454 4,499 At 31 December 2014 5,187 3,413 1,783 2,724 6,730 685 3,454 49 23,954 Current 2013 10,577 349 2,018 60 150 971 447 14,573 Non-‐current 2013 357 2,673 1,467 2,804 7,301 At 31 December 2013 10,934 3,022 3,485 60 150 971 2,804 447 21,874

Provision for risks on job orders The provision of € 803 thousand is to cover risks relating to certain job orders in progress for charges that

are likely to be incurred, in relation to customer disputes. The provisions made represent the best estimate

on the basis of knowledge possessed at the reporting date.

Provision for pending disputes At the end of the financial year, the company assesses the risk of having to pay future compensation in the

event of unsuccessful legal disputes with customers, suppliers and employees. In 2014 the provision was

adjusted by an amount of € 375 thousand. Furthermore, some disputes were settled, which originated

uses of € 38 thousand and releases of € 18 thousand.

Bonuses for employees The amount of € 426 thousand was set aside in respect of the estimated disbursement that will be made

on the basis of the results obtained by company management and for which, an accurate amount cannot

be defined annually, given that an incentive plan was set out linked to the achievement of medium-‐term

objectives.

Provision for investment risks The provision to cover investments, amounting to € 60 thousand, includes the provision to cover any

future losses of Alisei S.r.l. in liquidation. Furthermore, it should be pointed out that the year saw the

reclassification of a provision of € 2,664 thousand from the provision for risks on job orders in relation to

the future balancing of losses of a consortium company held by the Company.

Provision for corporate reconstruction This provision has been set aside to include the amounts due for severance employee costs and the costs

of social shock absorbers set out under the Redundancy Scheme Act and unemployment benefits (CIG),


relating to subordinate employees, within the context of the various reorganisation projects that involved

the Company in the last years.

At 31 December 2014 the Company started an additional plan and, therefore, set aside provisions of €

4,617 thousand.

Tax dispute provision The provision for risks related to tax disputes is detailed below:

› At 31 December 2014 a provision of € 560 thousand was recognised against the tax dispute raised

with the Turin Customs Agency against the payment notice issued by the latter, related to the non-‐

payment of taxes and the provincial surcharge, plus interest and penalties. The aforementioned notice

was challenged under appeal before the Provincial Tax Commission of Turin which fully cancelled the

notice. The Customs Agency filed an appeal against the ruling before the Regional Tax Commission of

Turin, which gave an unfavourable opinion against the Company. The Supreme Court also gave an

unfavourable opinion against the Company and ordered it to pay the taxes due to an amount of € 340

thousand. The amount was paid out on 16 January 2015;

› € 45 thousand were allocated based on the tax dispute with Customs Agency of Turin, which arose

following an administrative technical report on the Ivrea area.

› € 26 thousand concerning residual amounts for the tax notices, partially relieved, received for

companies incorporated in previous years;

› An amount of € 54 thousand was set aside following the tax litigation for the Bitritto district as a result

of objections raised against payments of excise duties.

Provision for employee legal proceedings The provision for risks related to employee legal proceedings, amounting to € 3,454 thousand, refers to the

best estimation of liabilities as at 31 December 2014, whose risk is deemed to be likely, connected to

ongoing labour law disputes.

Other provisions for risks and charges The provision, equal to € 49 thousand, includes the best estimate of future charges on some contracts on

the basis of the information available as at the reporting date.


19. LOANS AND OTHER FINANCIAL LIABILITIES

The items a long-‐term Loans and Loans and other current financial liabilities include both the non-‐current

and current portion of loans from credit and financial institutions or from debts to other lenders recorded

in the financial statements in application of the financial method of recognizing leases, as well as other

current financial debts such as, for example, the debt for the acquisition of investments or business units.

The details are shown below:

(in thousands of Euro) Total 31.12.2014 within 1 year after 5 years

Senior Secured Notes 370,280 370,280 Banca Popolare di Vicenza 12,867 12,867 C.C.F.S. loan 0 MPS 0 Debt for the acquisition of investments / business units 6 6 Investments’ price adjustment 725 725 Finance leasing obligations 27 27 Advance payment on invoices 2 2 Loan from Parent company/Subsidiaries 17,376 17,376 Capital contribution to be paid 5 5 Prepaid commissions on guarantees (55) (55) Accrued expenses 13,458 13,458

TOTAL LOANS 414,691 44,411 370,280

Loans existing as at 31 December 2013 are shown below:

Total 31.12.2014

within 1 year from 1 to 5 years

after 5 years

Senior Secured Notes 427,130 15,022 412,108 C.C.F.S. loan 17,987 17,987 MPS 19,978 4,993 14,985 Banca Popolare di Vicenza 25,495 12,624 12,871 Debt for the acquisition of investments 10,610 10,610 Finance leasing obligations 105 78 27 Advance payment on invoices 129 129 Current bank overdraft 0 Loan from parent company/Subsidiaries 24,292 24,292 Other financial liabilities 0 Financial liabilities measured at fair value through profit and loss 23 23 Due to factoring agencies 8,277 8,277 Capital contribution to be paid 1,610 1,610 Prepaid expenses from commissions on guarantees (140) (140)

TOTAL LOANS 535,495 95,503 27,884 412,108


High-‐Yield bond issue On 22 July 2013 the Company announced the plan to issue High Yield bonds (Senior Secured Notes) due

August 2020, to be offered solely to qualified investors, mainly in order to repay most of the existing bank

loans and to finance net working capital, also replacing the assignments of revolving credit previously

made for this purpose.

From a broader viewpoint, the Company embarked on the process of issuing these bonds in order to

provide the Group with the financial cover necessary to conduct its business over a long-‐term time

horizon.

On 26 July MFM S.p.A set the amount of the bond issue at € 425 million and set the issue price at 98.713%

and the coupon at an annual fixed rate of 8.5% (payable on a six-‐monthly basis), through the publication of

the Offering Memorandum.

The bond, which was issued on 2 August 2013, is listed on the Euro MTF Market of the Luxembourg Stock

Exchange and on the Extra MOT Pro Segment of the Italian Stock Exchange.

In relation to the issue and placement process, which was regulated by the law of the State of New York

(Rule 144A and Regulation S of the Security Act 1933), a purchase agreement was signed between the

initial purchasers (J.P. Morgan Securities plc, UniCredit Bank AG, Banca IMI S.p.A. and Mediobanca – Banca

di Credito Finanziario S.p.A.), which were also institutional investors, the issuer (MFM) and the guarantors

(i.e. companies owned by the issuer that guarantee the bonds: Servizi Ospedalieri S.p.A. and Manutencoop

Private Sector Solutions S.p.A.).

The bond was then placed by the initial purchasers only as specified below:

› With qualified institutional investors in the U.S.A., in application of Rule 144A of the U.S. Security Act;

› With qualified institutional investors outside the U.S.A., as defined by Regulation S of the U.S. Security

Act.

Accordingly, a global bond certificate was published in application of Rule 144A and a global bond

certificate was published in application of Regulation S.

At 31 December 2014 the portion of debt amounted to € 13,458 thousand related to the interest accrued

on that date.

The debt due beyond five years, which amounted to € 370,280 thousand, was equal to the residual

amount of the loan as at 31 December 2014 for € 380,000 thousand, net of any additional charges incurred

for the bond issue of € 380 and of the discount on the loan, for an overall amount of € 9,720 thousand at

31 December 2014. The additional charges and the issue discount are amortized on the basis of a finance

criterion.

To protect the investment of the Bondholders of the so-‐called notes, the rules governing the bond issue

provide for a system of guarantees and restrictions (covenants). In fact, some limitations are envisaged on

the financial operations of the Issuer and of its subsidiaries, while leaving the Company the freedom of

movement insofar as the operations undertaken contribute, at least potentially, added value and cash

flows to the Company. These restrictions consist of limitations on the possibility of incurrence of

indebtedness and of making distributions of dividends, investments and some types of payments that fall

outside the scope of the so-‐called Restricted Group payments. Furthermore, there are provisions in

relation to the allocation of sums obtained from the transfer of fixed assets, extraordinary operations and

transactions with related parties and the issue of collaterals to third parties on corporate assets. The

restrictions in question lie not so much in the absolute prohibition on carrying out the abovementioned


operations, but rather in checking for compliance with certain financial ratios (incurrence base financial

covenants), the presence of certain conditions or a quantitative limit on the performance of the above

operations. Finally, periodic disclosure obligations are provided for in relation to the Company’s financial

position, results of operation and cash flows. The limits and provisions envisaged in the rules governing the

bond issue are in line with the market practice for similar operations.The failure by the Issuer to comply

with one or more covenants, in addition to significant events that express a state of insolvency, constitute

events of default. For the most of them, there is the possibility of remediation within a certain period of

time. The event of default relating to the state of insolvency or the absence of remediation of any other

events of default are a reason for acceleration, i.e. the forfeiture of the right to the time limit and the early

redemption of the bonds. As at the reporting date of these financial statements, no events of default had

occurred and the financial covenants, in relation to which no periodic check is required, had been complied

with. Owing to the good financial performance after the issue, which provided surplus resources, and with

a view to cutting borrowing costs on a prospective basis, in the last quarter of the year, the Company

formalised the acquisition of some of its bonds on the open market, for a total nominal amount of € 45

million, at a weighted average buy-‐back price of just under 93% against an issue price equal to 98.713% on

2 August 2013. The transactions in question entailed the recognition of financial capital gains in the income

statement, net of related commissions, equal to € 3.3 million thus giving rise to a proportional write-‐off of

the upfront fees that had been accounted for at the time of the issue to an amount of € 1,2 million.

Revolving Credit Facility In the framework of the bond issue process, on 31 July 2013 the Company also signed a 3-‐year Revolving

Credit Facility (RCF) agreement that assured a revolving credit line, which can be activated on request, for

a nominal amount of € 30.0 million with a pool of banks made up of UniCredit S.p.A., J.P. Morgan Chase

Bank S.A. Milan Branch, Cassa di Risparmio in Bologna S.p.A. and Mediobanca – Banca di Credito

Finanziario S.p.A.. as from the execution of the agreement, no use of the line has been requested from the

lending banks. With effect from 30 July 2014, the Company informed the banks of the pool as to its

intention to cancel said credit line. Therefore, the residual amount to be amortised in relation to the costs

incurred for the registration of the line, equal to € 579 thousand, was accounted for as a financial cost for

the period.

CCFS loan During the 2013 financial year, the Parent Company MFM entered into a new loan agreement with

Consorzio Cooperativo Finanziario per lo Sviluppo (CCFS) for a debt on account of capital of € 18,000

thousand, falling due in January 2016. The credit line was early repaid in the financial year.

Banca Popolare di Vicenza loan In 2011 a long-‐term loan agreement was stipulated with Banca Popolare di Vicenza. The loan of € 50

million was obtained by Banca Popolare di Vicenza. The loan has variable interest rates. As at 31 December

2014 the carrying amount was € 12,869 thousand, net of accessory charges.

MPS loan The loan with Banca Monte Paschi comprises a long-‐term credit line at a variable rate plus a spread

amounting to € 25 million, used partially, and expiring on 22 December 2017. The credit line was early

repaid in the course of the financial year.


Debts for the acquisition of non-‐controlling interests/business units This item, amounting to € 10,610 thousand at 31 December 2013, was almost fully written off in the

course of the year, as a result of the payment of the price adjustment (earn-‐out) to the non-‐controlling

quotaholders of Gruppo Sicura S.r.l., for a total amount of € 10,604 thousand, which took place on 16 July

2014.

Investments’ price adjustment This item refers to the price adjustment relating to the transfer of the sub-‐holding company controlled by

MIA SpA, which took place on 30 December 2014.

Advance payments This item showed a balance of € 2 thousand at 31 December 2014, against an amount of € 129 thousand at

the end of the previous financial year. Bank overdraft and advance payments on current accounts are not

backed by any guarantee. The operations of the same was linked, in the past, to temporary declines in

liquid assets, within the flows of receipts and payments as at the balance sheet date.

Accrued interest expenses At 31 December 2014 the Company recognised accrued interest expenses of € 13,458 thousand relating to

the amount accrued on the coupon of the Senior Secured Notes due 2 February 2015.

Loans from Parent company and Subsidiaries This item mainly refers to intragroup financial current accounts held with subsidiaries Manutecoop Private

Sector Solutions S.p.A.. Financial payables are not secured and are repayable in a lump-‐sum at the end of

the year, except in the case of a tacit renewal. It should be noted that the Company holds a financial

account on which transactions with the controlling company Manutencoop Società Cooperativa are

settled. The account accrues interest at the 3-‐month Euribor rate plus a spread. As at 31 December 2014

the balance due to the parent company amounted to € 26 thousand.

Obligations deriving from finance leasing Payables for leases refer to motor vehicles and plant and machinery used in the production process.

Collections on behalf of factoring agencies -‐ Credit Agricole Corporate & Investment Bank (Calyon) and Banca IMI The debt balance at 31 December 2013, equal to € 8,277 thousand, related to receivables transferred

under non-‐recourse factoring transactions on a revolving basis carried out by the Company, collected on

behalf of the assignee and still not paid to the factor as at the balance sheet date. At the time of the

gradual abandonment of the assignments in the course of the 2013 financial year and also as a result of

the already described transaction involving the repurchase of the receivables not yet collected by Banca

IMI, with the consequent termination of all the service operations, this debt at 31 December 2014 was

equal to zero.

Capital contribution to be paid The Company recognized obligations for capital contribution to be paid to other investments for € 5

thousand.


20. TRADE PAYABLES AND ADVANCES FROM CUSTOMERS

The table below sets forth the breakdown of the item as at 31 December 2014 and 31 December 2013:


Trade payables 215,972 252,177 Trade payables to Associates and Joint-‐ventures 9,406 15,765 Trade payables to Subsidiaries 26,823 47,301 Trade payables to Parent companies 9,453 9,773 Trade payables to Affiliates 164 192 Payables to customers for work to be performed 6,076 6,510

TOTAL 267,893 331,718

At 31 December 2014 trade payable and advances from customers amounted to € 267,893 thousand

against € 331,718 thousand at 31 December 2013.

Trade payables do not accrue interest and are settled for, on average, 90/120 days from the invoice date.

21. OTHER CURRENT LIABILITIES

The table below sets forth the breakdown of the item as at 31 December 2014 and 31 December 2013:


Payables to employees 39,797 35,798 Payables to social security 7,319 7,157 Tax payables 31,363 47,062 Collections on behalf of ATI (“Associazione temporanea di Imprese”)

11,821 16,276

Other payables to Subsidiaries 50 30 Other payables to Parent Company 76 4 Other payables to Associates 530 Payables to directors and statutory auditors 155 136 Property collection on behalf of customers 2,176 2,176 Other payables 5,001 3,107 Accrued expenses and prepaid income 6 661

TOTAL 98,293 112,407

Collections on behalf of third parties relate to the sums collected by the company, on behalf of third

parties, relating mostly to “Consip” job orders.

Other payables are settled after 30 days on average, excluding payables due to employees for accrued

summer bonuses (14th monthly salary) and accrued wages and vacation leave paid at 6 months on

average, and the amounts due to the Tax Authorities for deferred VAT payments settled at the moment of

collection of the receivables.


22. REVENUES FROM SALES AND SERVICES

The breakdown of the item is shown below for the years ended 31 December 2014 and 31 December

2013:


Integrated services -‐ system and building maintenance 146,964 145,495 Cleaning and sanitation services 295,157 301,137 Heat management 113,726 128,119 Construction work 61,403 92,508 Plant construction and re-‐qualification work 21,952 18,148 Landscaping services 5,392 8,943 Porterage services 5,552 11,191 Asset management 626 817 Cemetery services 1,187 1,229 Other services 75,876 77,001

TOTAL 727,834 784,588

The decrease in revenues from sales and services recorded in this item was attributable to the reduced

volumes achieved in 2014.

23. OTHER OPERATING REVENUES

The breakdown of the item is shown below for the years ended 31 December 2013 and 2012:


Reimbursement of damages 511 154 Gains on sales of property, plant and machinery 38 119 Grants 482 982 Other revenues 2,277 1,020

TOTAL 3,308 2,274

As at 31 December 2014, the balance was € 3,308 thousand, compared to € 2,274 thousand in 2013.

The item “Other Revenue” mainly pertains to the recovery of costs for seconded personnel and the effects

of some transactions executed and completed in the year.

An amount of € 482 thousand was recognised as operating grants, mainly relating to employee training

projects.


24. COSTS OF RAW MATERIALS AND CONSUMABLES


2013:

31 December 2014 31 December 2013

Change in inventories of raw materials (342) (710) Fuel consumption (57,086) (73,779) Consumption of raw materials (40,181) (43,312) Purchase of auxiliary materials and consumables (4,878) (5,739) Other purchases (1,761) (2,017)

TOTAL (104,248) (125,556)

As at 31 December 2014 the item amounted to € 104,248 thousand compared to € 125,556 thousand in

2013. The decrease in Consumption of Raw Materials is mainly due to the decreasing fuel costs, which

were affected by the annual decrease in market prices.

25. COSTS FOR SERVICES AND USE OF THIRD PARTY ASSETS


2013:


Third-‐party services (155,790) (168,485) Professional services (35,027) (35,515) Consortia services (38,717) (44,058) Utilities (4,475) (5,313) Rent expense (12,239) (13,735) Other personnel expenses (6,031) (6,573) Transport (144) (261) Equipment maintenance and repair (4,502) (5,559) Insurance and sureties (3,659) (3,247) Travel expenses and reimbursement of expenses (2,116) (2,227) Advertising and marketing (366) (662) Rentals and other (2,327) (2,589) Directors’ and Statutory Auditors’ fees (416) (407) Bank services (109) (106) Bonuses and commissions (12) (11) Other services (67) 662

TOTAL (265.995) (288.086)


For the year ended 31 December 2014, Costs for services totalled € 265,995 thousand against € 288,086

thousand in 2013, marking a decrease of € 22,091 thousand compared to the previous year, mainly due to

lower costs for third party services. As early as in previous years the Company started up a process to

increase insourcing of certain activities, which resulted in a change in the mix of production factors in

favour of the cost of labour. At the same time, the Company has set targets for limiting overheads relating

to its organizational structures, also by reducing recourse to professional services.

26. PERSONNEL COSTS


2013:


Wages and salaries (202,385) (193,738) Social security charges (63,723) (60,952) Temporary and leased personnel (29,784) (30,398) Other current benefits (1,187) (2,196) CURRENT BENEFITS (297,079) (287,284) Employment termination indemnity (385) (463) Other subsequent benefits 0 0 DEFINED BENEFITS (385) (463) Payments to employee pension funds (12,124) (11,808) DEFINED BENEFITS (12,124) (11,808) EMPLOYMENT TERMINATION BENEFITS (2,983) (3,052)

TOTAL PERSONNEL COSTS (312,571) (302,607)

The financial year ended 31 December 2014 showed a balance of € 312,571 thousand against a balance of

€ 302,607 thousand in 2013. The portion of termination indemnity paid to the INPS and to supplementary

pension funds is recognised under current benefits.

The financial year saw:

› a rise in the average number of workers, partly due to the insourcing process described in note 25,

and partly due to the use of personnel in the changed contracts in the Hygiene segment;

› additional reorganisation efforts, which also entailed, in 2014, costs for mobility, extraordinary

redundancy schemes and early retirement incentives.


27. OTHER OPERATING COSTS


2013:


Other operating costs (2,338) (2,015) Fines and penalties (1,564) (1,501) Taxes other than income taxes (1,692) (1,690) Securitisation Credit discount 0 (503) Capital losses on disposals of assets (115) (65) Losses on receivables (33) (126)

TOTAL (5,742) (5,900)

At 31 December 2014 Other operating costs amounted to € 5,742 thousand (€ 5,900 thousand at 31

December 2013) and remained substantially unchanged compared to the previous year.

In this regard, it should be noted that credit discount costs connected to the assignments of trade

receivables without recourse were written off, as a result of the exit, as early as at the end of the previous

year, from the plans for revolving assignments in place with Crédit Agricole Corporate & Investment Bank

and Banca IMI.

28. AMORTIZATION/DEPRECIATION, WRITE-‐DOWNS AND WRITE-‐BACKS OF ASSETS


2013:


Amortization intangible assets (5,791) (6,205) Write-‐down of equity investments in Group companies (3,199) (13,099) Write-‐downs of trade receivables (1,598) (1,972) Depreciation of property, plant and equipment (3,163) (3,493) Depreciation leased property, plant and equipment (66) (126) Impairment of Intangible Assets (4,418) 0 Impairment of Property, Plant and Equipment (23) 0 Write-‐backs of assets 6,212 0 Transfer of bad debt provision 9 218

TOTAL (12,038) (24,676)

The item Amortization/depreciation, write-‐downs and write-‐backs of assets amounted to € 12,038

thousand in 2014 from € 24,676 thousand in 2013.


The item ‘Write-‐down of Group equity investments’ mainly includes value adjustments recorded in relation

to the following companies:

› € 2,171 thousand related to the subsidiary Società Manutenzione Illuminazione S.p.A.;

› € 828 thousand related to the subsidiary Maco S.p.A.;

› € 103 thousand related to the subsidiary UFS -‐ United Facility Solutions;

› € 76 thousand related to the subsidiary Grid Modena S.r.l..

A decrease was recorded in the Write-‐down of receivables, from 1,972 thousand to € 1,598 thousand. The

decrease in the write-‐downs of trade receivables was mainly due to a lower risk of the receivables

recognized, while, at the same time, in the previous year this item had been affected by the write-‐downs

on some significant credit positions towards bankrupt customers.

In the year, impairment losses of tangible and intangible assets were recognised totalling € 4,441 thousand,

relating to the write-‐off of the residual net value of specific software used in the facility management

operations, which proved to be no longer suitable and strategic to be used for company business purposes,

as explained in note 6.


29. DIVIDEND AND INCOME (LOSS) FROM SALES OF INVESTMENTS


Dividends 12,619 13,042

Dividends pertaining to the year derive from subsidiaries and associates for € 12,318 thousand and other

equity investments (€ 301 thousand).

The details are shown below, compared with 2013:


Company Telepost S.p.A. 4,376 4,237 Manutencoop Private Sector Solutions S.p.A. 2,952 Roma Multiservizi S.p.A. 1,510 1,727 Servizi Ospedalieri S.p.A. 1,880 4,920 Gruppo Sicura 1,600 1,600 Gico System 10

TOTAL DIVIDENDS – GROUP COMPANIES 12,318 12,494


Company Golfo Aranci S.p.A. 2 Co.ve.di. S.r.l. 33 Progetto Vallata 239 Genesi Uno 213 274 CIICAI 5 0 Consorzio Cooperativo Finanziario per lo Sviluppo 1 1 Consorzio Coop. Costruzioni 80 Consorzio Nazionale Servizi 1

TOTAL DIVIDENDS -‐ OTHER COMPANIES 301 548


30. FINANCIAL INCOME


2013:


Interest on trade receivables 938 322 Interest on loans and intercompany current accounts 8,458 5,907 Interest from discounting of non-‐interest bearing loans 438 40 Interest on bank current accounts 493 463 Capital gains on securities 3,400 Income from derivatives 132 Other financial income 186 11

TOTAL OTHER FINANCIAL INCOME 13,912 6,875

Financial income recorded an increase compared to the same period in the previous year, equal to € 7,037

thousand, mainly connected to the buy-‐back of bonds on the open market for € 45 million, which entailed

the recognition of financial income of € 3,400 thousand, as described in note 19.

The interest from the discounting of non-‐interest bearing and trade receivables improved, the former (€

398 thousand) after the release of the provision set aside owing to shorter collection times and the latter

(€ 616 thousand) owing to the fact that the interest accounted for during the period was not written down,

differently from the previous period.

31. FINANCIAL CHARGES


Loans (36,597) (23,054) Other financial charges (4,768) (6,344) Bank loans and current account overdrafts (4) (1) Financial charges on Group financial accounts (1,143) (1,449) Financial charges on finance leases (0) (2)

TOTAL FINANCIAL EXPENSES (42,512) (30,850)

In 2014 Financial charges recorded an increase of € 11,662 thousand compared to the previous financial

year. The main change relates to the recognition of charges relating to the bond issue, as described under

note 19.

It should be noted that the year saw the write-‐off of interest discount costs connected to the assignments

of trade receivables without recourse, as a result of the abandonment, as early as at the end of the

previous year, of the revolving assignments programmes in place with Crédit Agricole Corporate &

Investment Bank and Banca IMI and of charges from derivatives, which had been terminated in the

previous year.


32. PROFIT (LOSS) FROM DISCONTINUED OPERATIONS

The transfer of the stake held in MIA S.p.A. gave rise to the recognition of a capital gain, in the Statement

of Profit/Loss for the year, net of additional operating costs of the transaction, equal to € 7,691 thousand.

This item also includes an amount of € 106 thousand of current taxes due in relation to the taxation of the

capital gain on disposal of equity investments, which, for IRES tax purposes, is expected to be equal to 5%

in the application of the participation exemption regime.

33. TAXES

The breakdown of the income taxes is shown below for the years ended 31 December 2014 and 31

December 2013.

31-‐Dec-‐14 31-‐Dec-‐13

Current IRES tax 4,903 10,956 Current IRAP tax 7,034 9,623 (Income) charges from tax consolidation (1,034) (1,428) Adjustment to current taxes of previous years (3,004) (220) Current taxes 7,899 18,931 Prepaid/deferred IRES tax (4,829) (1,484) Prepaid/deferred IRAP tax 288 (97) Prepaid/deferred taxes relating to previous years 86 78 Prepaid/(deferred) taxes (4,456) (1,502)

CURRENT, PREPAID AND DEFERRED TAXES 3,443 17,430

The reconciliation between IRES tax and IRAP tax recorded and theoretical tax resulting from application of

the tax rate in force for the years ended 31 December 2014 and 31 December 2013 to pre-‐tax profit is as

follows:

Reconciliation between theoretical and actual IRES tax rate


% %

Pre-‐tax profit 8,790 22,779 Ordinary rate applicable 27.50% 27.50% Effect of increases (decreases): -‐ Temporary differences 26,602 83.23% 10,143 16.41% -‐ Permanent differences (21,323) -‐66.71% (1,726) -‐2.08% IRES taxable income 14,069 39,841

ACTUAL RATE / TAX 3,869 44.02% 9,528 41.83%


Reconciliation between theoretical and actual IRAP tax rate


% %

Pre-‐tax profit 8,790 22,779 Ordinary rate applicable 1.17% 1.17% 2.78% 2.98% 2.80% 3.44%

3.90% 3.90% 4.66% 4.60% 4.73% 4.73% 4.82% 4.82% 4.97% 4.97%

Effect of increases (decreases): -‐ Labour cost 314,451 302,607 -‐ Provisions -‐ Balance from financial management 3,915 10,935 -‐ Other differences between taxable base and pre-‐tax result

(158,134) (107,131)

IRAP taxable income 169,022 229,190 -‐ of which at 1.17% 1,283 2,692 -‐ of which at 2.78% 992 1,398 -‐ of which at 2.80% 3,188 4,559 -‐ of which at 3.90% 107,205 135,758 -‐ of which at 4.66% 1,448 0 -‐ of which at 4.73% 3,504 6,068 -‐ of which at 4.82% 44,615 66,849 -‐ of which at 4.97% 6,787 11,866 Actual rate / Tax 7,034 80.02% 9,623 4.20%

The IRES tax rate for the year, i.e. the tax burden on the Net Profit came to 44.02%, with an increase

compared to 31 December 2014, when it stood at 41.83%. The rate includes the positive effect due to tax

revenues reported after the Company presented a supplementary declaration to the 2014 Modello Unico

tax return, after the recent clarification provided in Ministerial Circular Letter no. 31/E of 24 September

2013. Finally, it should be noted that in the 2014 financial year the profit was significantly affected by

capital gains from the transfer of equity investments on which IRES (Corporate Income) tax under the

participation exemption regime is therefore 5% of the taxable base.


34. DEFERRED TAXES

The breakdown of the prepaid and deferred taxes as at 31 December 2014 and at the end of the previous

year is shown below:

Prepaid and deferred taxes Equity Tax Effect Economic Tax Effect

31 December 2014

31 December 2013

31 December 2014

31 December 2013

Prepaid taxes: Multi-‐year costs 315 30 345 281 Finance lease -‐ Presumed losses on receivables 4,240 (151) 4,089 3,997 Provisions for risks and charges 5,011 604 4,920 3,925 Write-‐downs on asset items 1,221 (1,221) -‐ Discounting-‐back of receivables 2 2 2 Fees of Directors, Statutory Auditors and Independent Auditors

123 (1) 123 77

Services not completed Amortization 1 1 1 Adjustments to job order margin -‐ Interest expense 6,075 (5,617) 457 87 Employee benefits and length of service bonuses -‐ Substitute tax 1,385 1,385 1,385 Restructuring fund 491 464 955 964 Cash flow hedge valuation 336 Cash cost deduction 13 19 32 33 Other temporary differences 1,172 (211) 960 975 Total prepaid taxes 18,662 (4,697) 13,269 12,063 Deferred taxes: Tax amortisation -‐ -‐ IFRS work in progress valuation -‐ Lease for tax purposes (46) (3) (49) (52) Employee benefit discounting (541) (541) (403) Goodwill amortisation (7,922) 617 (6,428) (5,804) Purchase Price Allocation (PPA) (2.183) (75) (2.258) (2.901) Capital gains -‐ deferred taxation (8) (9) (9) Other temporary differences (208) (11) (218) (184) Total deferred taxes -‐ 10,367 (13) (9,503) (9,353) Net prepaid/(deferred) taxes 8,295 (4,710) 3,766 2,710


35. COMMITMENTS AND CONTINGENT LIABILITIES

Financial lease The Company signed finance leases for motor vehicles. The table below details the amount of future rental

fees deriving from finance leases and the current value of these fees:

(in thousands of Euro) 2014 2013

Rental fees Current value of rental fees

Rental fees Current value of rental fees

Within one year 28 27 79 79 From one year to five years 28 27 Total lease assets 28 27 107 105 Financial Charges (1) (2) Current value of rental fees 27 27 105 105

Guarantees given The Company has the following contingent liabilities as at 31 December 2014:

› it granted sureties for bank overdrafts and to secure the obligations of subsidiaries and associates for

a maximum amount of € 16,399 thousand (2013: € 5,170 thousand);

› it granted sureties granted to third parties to ensure the correct fulfilment of contract obligations in

place with customers, as well as for VAT refunds from Inland Revenue Agency, for a total amount of €

184,516 thousand (2013: € 195,735 thousand);

› guarantee in favour of Crédit Agricole Corporate & Investment Bank to ensure correct fulfilment of

factoring contracts equal to € 1,500 thousand.

The total exposure of guarantees granted to third parties comes to € 187,566 thousand. It is not believed

that any liabilities will emerge.

The Company have issued, in favour of the bondholders, described under note 19, the following

collaterals:

› first-‐recorded pledge on the shares held by Manutencoop Private Sector Solutions S.p.A., equal to

100% of the capital of the same;

› first-‐recorded pledge on the shares held by Servizi Ospedalieri S.p.A., equal to 100% of the capital of

the same;

› assignment as security of receivables from private customers claimed by the Company. At 31

December 2013 the receivables were equal to € 70,634 thousand;

› execution of a deed of pledge on the current account held by the Company with Unicredit S.p.A.,

which were credited with the amounts concerning the private customers assigned as security. At 31

December 2014 the current account reported a balance of € 6,435 thousand;

› an assignment of receivables as security, which arise from shareholders’ loans (Proceeds Loan)

disbursed to Manutencoop Private Sector Solutions S.p.A. (€ 16,907 thousand), Servizi Ospedalieri

S.p.A. (€ 32,274 thousand), and of any and all proceeds arising therefrom.


On 29 September 2014, the guarantees issued to the Lending Banks that had granted the Revolving Credit

Facility were formally cancelled. This took place after the facility had been voluntarily cancelled on 30 July

2014, and therefore all the relative guarantees (assignment of receivables as security and establishment of

a pledge over current accounts), which had been previously shared between bondholders and the Lending

Banks of the Revolving Credit Facility, remain such only to the bondholders. On the contrary, MFM S.p.A.’s

movable assets, previously subject to a lien in the framework of the arrangement became fully available to

the company again.

Furthermore, Manutencoop Private Sector Solutions S.p.A. and Servizi Ospedalieri S.p.A. issued personal

securities amounting to a maximum total corresponding to the amount of the Proceeds Loans, equal to €

16,907 thousand and € 32,274 thousand, respectively.

The guarantees listed above may be enforced by the counterparties only in the case that one of the events

of default envisaged in the abovementioned contracts occurs; up to the occurrence of the same, the assets

covered by the guarantee are fully available to the Company. At 31 December 2014 no events of default

had occurred.


36. TRANSACTIONS WITH RELATED PARTIES

Terms and conditions of transactions with related parties

PARENT COMPANY

Revenues Costs Financial Income

Financial Expenses

Trade receivables

Financial receivables and others

Trade payables

Financial payables

and others

Manutencoop Cooperativa

31-‐Dec-‐14 159 33,812 57 113 17,112 9,453 102 31-‐Dec-‐13 113 34,393 191 8,885 9,777 143

TOTAL PARENT COMPANY

31-‐Dec-‐14 159 33,812 0 57 113 17,112 9,453 102 31-‐Dec-‐13 113 34,393 0 191 8,885 9,777 0 143

SUBSIDIARIES Revenues Costs Financial Income

Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

Alisei S.r.l. 31-‐Dec-‐14 31-‐Dec-‐13 (1) 3

Co.Ge.F. soc.cons.a r.l.

31-‐Dec-‐14 4,292 3,715 1,801 1,588 31-‐Dec-‐13 10,511 10,326 10,425 11,756

Cons. Igiene Ospedaliera Soc.Cons.a r.l.

31-‐Dec-‐14 1,001 455 323 1 325

31-‐Dec-‐13 695 258 635 370 1

Cons. Imolese Pulizie Soc.Cons.a r.l.

31-‐Dec-‐14

31-‐Dec-‐13 138 48 36

Cons. Servizi Toscana Soc.Cons.a r.l.

31-‐Dec-‐14 97 123 151

31-‐Dec-‐13 101 157 624 188

Consorzio Sermagest Servizi Manutentivi Gestionali

31-‐Dec-‐14

31-‐Dec-‐13

Gestlotto 6 Soc.Cons.a r.l.

31-‐Dec-‐14 31-‐Dec-‐13 4 6 43 20 -‐

Global Oltremare Soc.Cons.a.r.l.

31-‐Dec-‐14 23 628 57 586 31-‐Dec-‐13 23 421 24 385 -‐ -‐

Ferraria Soc.Cons.a r.l.

31-‐Dec-‐14 664 725 664 725 31-‐Dec-‐13

Sicura S.p.A 31-‐Dec-‐14 524 1,591 3 377 823 1,132 31-‐Dec-‐13 0 1,026 1,395

Gymnasium Soc.Cons.a r.l.

31-‐Dec-‐14 1 33 7 5 31-‐Dec-‐13 1 33 7 5

Isom Gestione Soc.Cons.a.r.l.

31-‐Dec-‐14 7,236 5,408 5,329 3,030 31-‐Dec-‐13 9,454 7,919 6,961 4,922

Isom Lavori Soc.Cons.a.r.l.

31-‐Dec-‐14 5,881 5,201 327 825 31-‐Dec-‐13 3,695 3,278 3,300 2,414

MACO S.p.A. 31-‐Dec-‐14 73 252 130 26 1,911 13 31-‐Dec-‐13 232 358 94 0 82 112 2,279 -‐

Manutencoop Private Sector Solutions S.p.A.

31-‐Dec-‐14 8,367 17,832 296 13,253

31-‐Dec-‐13 89,801 1,138 616 842 26,497 333 17,012 13,033

Manutenzione Installazione Ascensori S.p.A.

31-‐Dec-‐14 788 1,839 1,900 516 633

31-‐Dec-‐13 752 802 1,183 455 410 34,372 -‐


SUBSIDIARIES Revenues Costs Financial Income

Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

Palmanova servizi energetici soc.cons. r.l.

31-‐Dec-‐14 325 1,174 448 402

31-‐Dec-‐13 345 1,278 53 969

S.AN.CO. Soc. Conso a r.l.

31-‐Dec-‐14 66 2,721 70 3,150 31-‐Dec-‐13 182 -‐ 175 2,641 -‐ 70 3,150

S.AN.GE Soc. Cons. a r.l.

31-‐Dec-‐14 21,225 13,303 157 6,178 3,734 4,453 31-‐Dec-‐13 20,073 12,564 148 9,848 3,949 3,729

Servizi Brindisi soc.cons.a r.l.

31-‐Dec-‐14 204 264 181 31-‐Dec-‐13 133 1,382 245 1,142

Servizi Marche Soc.Cons.a r.l.

31-‐Dec-‐14 12 31-‐Dec-‐13 0 12 3

Servizi Ospedalieri S.p.A.

31-‐Dec-‐14 2,506 128 4,063 1,281 48,505 98 55

31-‐Dec-‐13 1,698 -‐ 183 2,794 -‐ 81 1,490 204 64,605 1,454

Servizi Taranto Soc. Cons. a r.l.

31-‐Dec-‐14 1,727 4,338 2,603 2,688 31-‐Dec-‐13 1,802 4,241 4,520 5,015

Simagest 2 Soc.Cons.a r.l.

31-‐Dec-‐14 208 79 4 1 31-‐Dec-‐13 283 4

Simagest 3 Soc.Cons.a r.l.

31-‐Dec-‐14 2 3 31-‐Dec-‐13 2 3

Società Manutenzione Illuminazione S.p.A.

31-‐Dec-‐14 206 14 508 89 12,167 14

31-‐Dec-‐13 432 521 256 9,209

Telepost S.p.A. 31-‐Dec-‐14 2,213 363 219 726 30 156 4,090 31-‐Dec-‐13 1,961 350 373 655 192 9,662

Logistica Sud-‐Est Soc. Cons. a r.l.

31-‐Dec-‐14 800 1,773 191 363 31-‐Dec-‐13 423 964 249 525

COFAM S.r.l. 31-‐Dec-‐14 110 81 31-‐Dec-‐13 86 30

Evimed S.r.l. 31-‐Dec-‐14 23 201 13 92 31-‐Dec-‐13 238 118

Firing S.r.l. 31-‐Dec-‐14 15 11 9 6 31-‐Dec-‐13 6 19

MCF Servizi Integrati Soc. Cons. a r.l.

31-‐Dec-‐14 7,656 8,892 6,523 6,343

31-‐Dec-‐13 5,863 6,979 4,831 5,311

KANARIND Soc. Cons.rl

31-‐Dec-‐14 7,310 6,027 8,324 2,429 31-‐Dec-‐13 8,585 7,068 10,114 7,691

Leonardo S.r.l. 31-‐Dec-‐14 43 146 18 125 31-‐Dec-‐13 9 5

Nettuno Ascensori S.r.l.

31-‐Dec-‐14 177 113 31-‐Dec-‐13 260 161

Sicurama S.r.l. 31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 31-‐Dec-‐13 7 243 4 135

Securveneta S.r.l. 31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 31-‐Dec-‐13 3 3

Sedda S.r.l. 31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 31-‐Dec-‐13 10 5

Servizi L'Aquila Soc. Cons. a r.l.

31-‐Dec-‐14 91 182 51 106 31-‐Dec-‐13 113 232 83 155

Unilift S.r.l. 31-‐Dec-‐14 5 224 3 122 31-‐Dec-‐13 5 178 4 193

TOTAL SUBSIDIARIES

31-‐Dec-‐14 64,044 56,296 6,761 219 46,726 85,298 29,296 17,405 31-‐Dec-‐13 156,772 61,189 5,356 1,137 84,357 48,013 134,421 24,154


JOINT VENTURES


Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

Cardarelli Soc. Cons. a r. l.

31-‐Dec-‐14 -‐ 1,395 -‐ -‐ -‐ -‐ 403 -‐ 31-‐Dec-‐13 -‐ 1,148 -‐ -‐ -‐ 1,043 -‐ -‐

Consorzio Leader Soc.Cons.a r.l.

31-‐Dec-‐14 14 6

31-‐Dec-‐13 0 -‐ -‐ -‐ 13 6 -‐ -‐

DUC Gestione Sede Unica Soc.Cons.a r.l.

31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐

31-‐Dec-‐13 5,132 2,579 -‐ 0 7,014 411 -‐ -‐

Legnago 2001 Soc.Cons.a r.l.

31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 31-‐Dec-‐13 -‐ -‐ 6 -‐ -‐ 216 78 -‐ -‐

Malaspina Energy Soc. Cons. a r.l.

31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐

31-‐Dec-‐13 -‐ 0 61 4 -‐ 1,247 187 172 -‐

SCAM Soc.Cons. a r.l.

31-‐Dec-‐14 7 31-‐Dec-‐13 -‐ -‐ -‐ -‐ 7 -‐ -‐ -‐

Serena s.r.l. in liquidation

31-‐Dec-‐14 49 31-‐Dec-‐13 -‐ -‐ -‐ -‐ 49 -‐ -‐ -‐

CO. & MA. Soc. Cons. a r.l

31-‐Dec-‐14 360 1,094 439 1,094 31-‐Dec-‐13 -‐ -‐ -‐ -‐ -‐ -‐ -‐ 4

TOTAL JOINT VENTURES

31-‐Dec-‐14 360 2,489 0 0 509 0 1,503 0 31-‐Dec-‐13 5,132 3,782 4 0 8,546 1,724 172 4

ASSOCIATES Revenues Costs Financial Income

Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

Bologna Gestione Patrimonio soc.cons.r.l.

31-‐Dec-‐14 75 129 198

124

31-‐Dec-‐13 75 87 -‐ -‐ 198 60 -‐ -‐

Bologna Multiservizi soc.cons.a r.l.

31-‐Dec-‐14 102 488 174 1,686

31-‐Dec-‐13 1,386 4,233 -‐ -‐ 2,082 5,206 -‐ -‐

Como Energia Soc.Cons.a r.l.

31-‐Dec-‐14 892 599 31-‐Dec-‐13 -‐ 1,044 -‐ -‐ -‐ 655 -‐ -‐

Gico Systems S.r.l.

31-‐Dec-‐14 7 613 4 279 31-‐Dec-‐13 7 505 -‐ -‐ 7 315 -‐ -‐

Global Provincia di RN Soc.Cons.a r.l.

31-‐Dec-‐14 251 70 18

31-‐Dec-‐13 -‐ -‐ -‐ -‐ 251 18 170 -‐

Global Riviera Soc.Cons.a r.l.

31-‐Dec-‐14 60 55 117 31-‐Dec-‐13 7 14 -‐ -‐ 8 -‐ 177 -‐ -‐

Global Vicenza soc.cons.r.l.

31-‐Dec-‐14 214 1,396 163 603 31-‐Dec-‐13 210 1,461 -‐ -‐ 16 595 -‐ -‐

Grid Modena S.r.l.

31-‐Dec-‐14 18 31-‐Dec-‐13 74 128 -‐ -‐ 118 -‐ -‐ -‐

HEADMOST Divisione Service Facility Management S.p.A.

31-‐Dec-‐14 454

31-‐Dec-‐13 -‐ -‐ -‐ -‐ 454 -‐ -‐ -‐

Livia soc.cons.r.l. 31-‐Dec-‐14 10 122 115 257 31-‐Dec-‐13 155 1,033 -‐ -‐ 101 868 -‐ -‐


ASSOCIATES Revenues Costs Financial Income

Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

Logistica Ospedaliera Soc.Cons.a.r.l.

31-‐Dec-‐14 426 92

31-‐Dec-‐13 -‐ 404 -‐ -‐ -‐ 94 -‐

Newco DUC Bologna S.p.A.

31-‐Dec-‐14 7 21 31-‐Dec-‐13 -‐ 7 -‐ -‐ -‐ -‐ 15 -‐

P.B.S. s.c.r.l. 31-‐Dec-‐14 7 31De-‐13 -‐ -‐ -‐ -‐ -‐ 3 -‐

Perimetro Gestione Proprietà Immobiliari Soc. Cons. p. A.

31-‐Dec-‐14 289 -‐ -‐ -‐ -‐ -‐ -‐ -‐

31-‐Dec-‐13 438 -‐ -‐ -‐ 236 -‐ -‐ -‐

Progetto Isom S.p.A.

31-‐Dec-‐14 227 13 72 206 31-‐Dec-‐13 214 -‐ 8 -‐ 295 -‐ 192 -‐

Progetto Nuovo Sant'Anna s.r.l.

31-‐Dec-‐14 174 118 104 4,671 31-‐Dec-‐13 170 -‐ 119 -‐ -‐ 8 5,402 -‐

Roma Multiservizi S.p.A.

31-‐Dec-‐14 1,623 2,232 519 529 1,945

31-‐Dec-‐13 1,489 4,797 -‐ -‐ 450 3,613 -‐ -‐

Savia Soc. Cons. a r.l.

31-‐Dec-‐14 454 2,258 287 1,625 31-‐Dec-‐13 608 1,892 -‐ -‐ 437 1,454 -‐ -‐

Se.Sa.Mo. S.p.A. 31-‐Dec-‐14 5,252 2 585 3,003 638 8 31-‐Dec-‐13 5,073 -‐ 33 -‐ 3,145 6 606 -‐

Servizi Napoli 5 soc.cons. r.l.

31-‐Dec-‐14 1,371 1,256 1,743 962 31-‐Dec-‐13 1,377 1,283 -‐ -‐ 2,535 1,728 -‐ -‐

Synchron Nuovo San Gerardo S.p.A.

31-‐Dec-‐14 8,415 167 6,163 313

31-‐Dec-‐13 2,944 95 -‐ -‐ 2,525 95 -‐ -‐

TOTAL ASSOCIATES

31-‐Dec-‐14 18,213 10,048 716 0 13,323 6,114 8,656 0 31-‐Dec-‐13 14,226 16,984 160 0 12,860 14,538 6,387 0

SUBSIDIARIES AND ASSOCIATES OF MANUTENCOOP SOC. COOP.


Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

Cerpac S.r.l. in liquidation

31-‐Dec-‐14 -‐ -‐ -‐ -‐ 1 -‐ -‐ -‐ 31-‐Dec-‐13 -‐ -‐ -‐ -‐ 1 -‐ -‐ -‐

Manutencoop Immobiliare S.p.A.

31-‐Dec-‐14 11 704 7 135

31-‐Dec-‐13 10 682 -‐ -‐ 3 153 -‐ -‐

Manutencoop Servizi Ambientali S.p.A.

31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐

31-‐Dec-‐13 20 -‐ -‐ -‐ 6 -‐ -‐ -‐

Nugareto Società Agricola Vinicola S.r.l.

31-‐Dec-‐14 13 28

31-‐Dec-‐13 2 2 -‐ -‐ -‐ 2 -‐ -‐

SIES s.r.l. 31-‐Dec-‐14 -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐ 31-‐Dec-‐13 1 -‐ -‐ -‐ 68 -‐ -‐ -‐

Segesta S.r.l. 31-‐Dec-‐14 17 9 31-‐Dec-‐13 11 -‐ -‐ -‐ 12 -‐ -‐ -‐


SUBSIDIARIES AND ASSOCIATES OF MANUTENCOOP SOC. COOP.


Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

TOTAL ASSOCIATES OF MANUTENCOOP SOC. COOP.

31-‐Dec-‐14 28 704 0 0 30 0 163 0

31-‐Dec-‐13 43 684 0 0 91 155 0 0

Consorzio Karabak Due soc.coop

31-‐Dec-‐14 3 -‐ -‐ -‐ -‐ -‐ -‐ -‐

31-‐Dec-‐13 3 -‐ -‐ -‐ -‐ -‐ -‐ -‐

Consorzio Karabak Tre soc.coop

31-‐Dec-‐14 1 -‐ -‐ -‐ -‐ -‐ -‐ -‐

31-‐Dec-‐13 1 -‐ -‐ -‐ -‐ -‐ -‐ -‐

Sacoa s.r.l. 31-‐Dec-‐14 80 17 -‐ -‐ 42 5 9 -‐ 31-‐Dec-‐13 80 17 -‐ -‐ 70 25 -‐ -‐

TOTAL ASSOCIATES OF MANUTENCOOP SOC. COOP.

31-‐Dec-‐14 84 17 0 0 42 5 9 0

31-‐Dec-‐13 84 17 0 0 70 25 0 0


Financial Expenses

Trade receivables


Trade payables

Financial payables

and others

TOTAL RELATED PARTIES

31-‐Dec-‐14 82,729 69,554 7,477 219 60,630 91,417 39,628 17,405 31-‐Dec-‐13 176,258 82,656 5,520 1,137 105,923 64,454 140,980 24,158

The transactions specified above were performed under normal market conditions, i.e. in line with

conditions that would be applied between independent parties. Market prices are applied to both

commercial and financial transactions; non-‐interest bearing loans are only disbursed in the case of pro-‐

quota financing granted by syndicated shareholders to consortium companies. These loans, if long-‐term,

were discounted in the financial statements of the Company. The Company not only provides technical-‐

production services relating to the core business, but also administrative and IT services and other general

services for certain group companies.

The Company also has some administrative, financial and lease service contracts in place with its parent

company Manutencoop Società Cooperativa.

No guarantees were given or received in relation to receivables and payables with related parties.


The main contracts in place with Manutencoop Group, controlled by Manutencoop Società Cooperativa,

are shown below:

› MFM signed a contract with associate Roma Multiservizi S.p.A. on the basis of which it is committed to

providing an Information System service. The contract, expiring on 31 December 2014, was extended

on 11 December 2014 and makes provision for an annual consideration of € 850 thousand.

› Manutencoop Cooperativa sub-‐leased to MFM S.p.A. the part of the property located in Zola Predosa,

via Poli no. 4 (BO), for office use. The duration of the lease has a 5-‐year term and is tacitly renewable,

except in the event of termination by one of the parties. Annual rent is expected to be € 1,722

thousand, to be paid in 12 monthly instalments.

› The affiliate company Manutencoop Immobiliare S.p.A. leased to MFM S.p.A. the part of the property

located in Mestre (VE), via Porto di Cavergnago no. 6, for office use. The duration of the lease has a 6-‐

year term and is tacitly renewable, except in the event of termination by one of the parties. Annual

rent is expected to be € 348 thousand, to be paid in 12 monthly instalments.

› On 6 July 2007, MFM S.p.A. signed a framework agreement with its parent company, Manutencoop

Cooperativa, in order to regulate the essential contents of subsequent personnel leases from

Manutencoop Cooperativa to MFM S.p.A, pursuant to Title III, Chapter I of Legislative Decree

276/2003. The contract has a five-‐year term, and is tacitly renewed, unless terminated by one of the

parties. As a result of said agreement, which has the legal nature of a legislative contract that does not

provide rights to third parties, MFM and the parent company Manutencoop Cooperativa set out the

conditions that regulate any future contracts for the leasing of shareholding personnel of

Manutencoop Cooperativa, and the operating rules for establishing and resolving said contracts.

› Manutencoop Cooperativa is committed to provide, on the basis of contracts stipulated with the

individual companies of the MFM Group, the payroll service relating to the Company’s employees.

› MFM S.p.A. signed agreements with Manutencoop Cooperativa and its subsidiaries, for the provision

of tax consultancy services.

› Starting from 2004, the Company applied the tax consolidation of the Parent Company Manutencoop

Società Cooperativa, pursuant to art. 117 et seq. of the TUIR (Italian Consolidated Law on Income Tax).

The agreement can be renewed every three years and so it was extended to 2013-‐2015. Relations

between the consolidating company Manutencoop Società Cooperativa and the consolidated

company, deriving from the transfer to the Parent Company of taxable amounts and tax losses,

generated by the consolidated company, are regulated contractually.


The Company is subject to the management and coordination activities of Manutencoop Società

Cooperativa and, pursuant to art. 2497-‐bis, paragraph 4 of the Italian Civil Code, the key figures of the

latest set of approved financial statements are provided below:

(in thousands of Euro) 31-‐Dec-‐13 31-‐Dec-‐12

STATEMENT OF FINANCIAL POSITION ASSETS A) Subscribed capital, unpaid 155 244 B) Fixed assets 342,646 302,775 C) Working capital 42,031 40,828 D) Accruals and Deferrals 2,257 2,480 TOTAL ASSETS 387,088 346,327 LIABILITIES AND SHAREHOLDERS EQUITY A) Shareholders’ equity: Share capital 11,741 14,136 Reserves 252,548 253,139 Profit/(Loss) for the year 338 (591) B) Provision for risks and charges 3,959 3,967 C) Employee Severance Indemnity 2,384 2,685 D) Payables 115,315 72,158 E) Accruals and Deferrals 804 833 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 387,088 346,327 MEMORANDUM ACCOUNT 175,405 242,560 INCOME STATEMENT A) Value of production 42,859 40,652 B) Cost of production (42,037) (40,450) C) Financial income and charges (3,060) (135) D) Financial asset value adjustments 1,631 (838) E) Extraordinary income and charges 185 84 Income taxes for the year 759 96 Profit/(Loss) for the year 338 (591)


37. FEES DUE TO THE MEMBERS OF THE SUPERVISORY BOARD, THE MANAGEMENT BOARD AND TO EXECUTIVES WITH STRATEGIC RESPONSIBILITIES

The table below reports the gross fees due to the Executives with Strategic Responsibilities and to the

members of the Supervisory Board and the Management Board, for any reason and in any form:

(in thousands of Euro) 2014 2013

MANAGEMENT BOARD Short-‐term benefits 1,097 2,995 TOTAL MANAGEMENT BOARD 1,097 2,995 SUPERVISORY BOARD Short-‐term benefits 396 390 TOTAL SUPERVISORY BOARD 396 390 OTHER STRATEGIC EXECUTIVES Short-‐term benefits 2,528 3,105 Subsequent benefits 280 104 TOTAL OTHER STRATEGIC EXECUTIVES 2,808 3,210

The table below reports the fees accrued in 2014 for the audit and non-‐audit services rendered by the

independent auditors and by entities in their network.


Audit services 452 613 Certification services 421 Other services 40 14 TOTAL FEES TO THE INDEPENDENT AUDITORS 492 1,048


38. MANAGEMENT OF FINANCIAL RISKS: OBJECTIVES AND CRITERIA

Management of financial requirements and the relative risks (mainly interest rate and liquidity risk) is

performed centrally within the Group Treasury on the basis of guidelines approved by the Company’s

Management Board, which are reviewed periodically. The main objective of these guidelines is to

guarantee the presence of a liability structure that is balanced with the composition of assets in the

financial statements, in order to maintain a high level of capital strength.

In 2013, the Company launched a High Yield bond issue due August 2020, which radically revised the

composition of the sources of financing. The bond issue that has been described has then rationalised, as

early as in the previous year, our debt structure with a view to greater future financial stability that is more

consistent with medium-‐ and long-‐term strategic growth and development targets. The financial

instruments that are traditionally used by the Company are made up of:

› short-‐term loans, targeted at funding working capital. The revolving factoring transactions in place

with Crédit Agricole Corporate and Investment Bank and Banca IMI were discontinued as early as in

the previous year, as were the very short-‐term credit facilities used for contingent cash requirements.

The financial resources collected by the Company from these instruments have been replaced by

those arising from the bond issue.

› medium/long-‐term loans with a multi-‐year repayment plan to cover investments in fixed assets and

acquisitions of companies and business units. A portion of the medium/long-‐term loans was repaid

through the proceeds from the bond issue. Furthermore, the derivative contracts in place were also

cancelled.

The Company also uses trade payables deriving from operations as financial instruments. The Company’s

policy is not to trade financial instruments.

Company financial instruments were classed into three levels provided by IFRS 7. In particular, the

hierarchy of fair value is defined in the following levels:

› Level 1: corresponds to prices of similar liabilities and assets listed on active capital markets.

› Level 2: corresponds to prices calculated through features taken from observable market data.

› Level 3: corresponds to prices calculated through other features that are different from observable

market data.


The table below shows the hierarchy for each class of financial asset measured at fair value as at 31

December 2014 and 31 December 2013:

Hierarchy Hierarchy

31-‐Dec-‐14 Level 1 Level 2 Level 3 31-‐Dec-‐13 Level 1 Level 2 Level 3

Non-‐current financial liabilities hedging derivatives non-‐hedging derivatives Current financial liabilities 22 22 hedging derivatives non-‐hedging derivatives other liabilities 22 22

TOTAL FINANCIAL LIABILITIES 0 0 22 22

In 2014 there were no transfers between fair value measurement levels.

There were no changes in allocation of financial assets that led to a different class of assets.

The Company does not hold instruments to warrant amounts receivable to mitigate credit risk. The

carrying amount of financial assets, therefore, represents its potential credit risk.

Hierarchy Hierarchy

31-‐Dec-‐14 Level 1 Level 2 Level 3 31-‐Dec-‐13 Level 1 Level 2 Level 3

Financial assets carried at fair value in the income statement

Financial receivables, securities and other non-‐current financial assets

101 101 102 102

securities 101 101 102 102 Available-‐for-‐sale financial assets Financial receivables and other current financial assets

0 0 0 0

hedging derivatives 0 0 0 0 non-‐hedging derivatives 0 0 0 0

TOTAL FINANCIAL ASSETS 101 101 102 102


Classes of financial assets and liabilities The following table shows the classification of financial assets and liabilities recorded in the Company, as

required by IFRS 7, and the associated economic effects for the year closed as at 31 December 2014:

(in thousands of Euro) 31-‐Dec-‐14 Available-‐for-‐sale financial assets

Loans and receivables

Non-‐current financial assets Other investments 2,718 2,718 Non-‐current financial assets 66,964 66,964 Other non-‐current assets 1,429 1,429 Total non-‐current financial assets 71,110 2,718 68,392 Current financial assets Trade receivables and advances to suppliers 436,044 436,044 Current tax receivables 20,939 20,939 Other current assets 19,870 19,870 Current financial assets 38,129 38,129 Cash and cash equivalents 92,641 92,641 Total current financial assets 607,623 0 607,623 Total financial assets 677,633 2,718 674,915 Financial income (charges) 13,912 0 13,912

(in thousands of Euro) 31-‐Dec-‐14 Financial Liabilities at Fair

Value in the Statement of

Income

Financial Liabilities

measured at amortised cost

Non-‐current financial liabilities Non-‐current loans 370,280 370,280 Total non-‐current financial liabilities 370,280 0 370,280 Current financial liabilities Trade payables and advances from customers 267,893 267,893 Other current financial liabilities 44,411 44,411 Total current financial liabilities 312,304 0 312,304 Total financial liabilities 682,584 0 682,584 Financial income and charges (42,512) 0 (42,512)


The same information for the year ended 31 December 2013 is shown below:

(in thousands of Euro) 31-‐Dec-‐13 Available-‐for-‐sale financial assets

Loans and receivables

Non-‐current financial assets Other investments 2,504 2,504 Non-‐current financial assets 59,568 59,568 Other non-‐current assets 1,275 1,275 Total non-‐current financial assets 63,346 2,504 60,842 Current financial assets Trade receivables and advances to suppliers 521,080 521,080 Current tax receivables 9,133 9,133 Other current receivables 19,419 19,419 Other current financial assets 96,535 96,535 Cash and cash equivalents 149,834 149,834 Total current financial assets 796,001 0 796,001 Total financial assets 859,347 2,504 856,843 Financial income (charges) 6,875 0 6,875

(in thousands of Euro) 31-‐Dec-‐13 Financial Liabilities at Fair

Value in the Statement of

Income

Financial Liabilities

measured at amortised cost

Non-‐current financial liabilities Non-‐current loans 439,993 439,993 Financial liabilities for non-‐current derivatives 0 0 Total non-‐current financial liabilities 439,993 0 439,993 Current financial liabilities Trade payables and advances from customers 331,718 331,718 Loans and other current financial liabilities 95,503 23 95,526 Total current financial liabilities 427,221 23 427,244 Total financial liabilities 867,214 23 867,237 Financial income and charges (30,850) 23 (30,873)

Liquidity risk The Company’s objective is to maintain a balance between funding and flexibility through the use, if

required, of current account overdrafts, short-‐term bank loans (hot money and advances), and finance

leases in addition to the bond issue resources.

The Company is characterised by a labour-‐intensive model which does not involve significant requirements

of capital for investments. However, the Company’s customers are mainly composed of public authorities,

known for long payment times in respect of the services provided. This aspect means the Company has to

also finance working capital through financial indebtedness.

Following the bond issue and the consequent repayment of the short-‐ and very short-‐term bank loans, the

liquidity risk was further mitigated through the execution of a Revolving Credit Facility (RCF) of € 30 million

that can be activated on demand. The line has never been used and no future use was contemplated in

consolidated financial plans. In 2014 it was therefore deemed appropriate to cancel the line.


Price risk The only risk of this kind to which the Company is exposed concerns changes in the price of oil products, in

relation to heat management activities.

These changes are, in certain cases accommodated by the conditions of contracts in place with customers,

given that price revision is provided for both by contract, and by art. 115 of Decree Law no. 163 of 12 April

2006. Therefore, it is deemed that the effect on the Company’s profit for the year arising from changes in

prices, even significant, would essentially have been insignificant, in terms of amount.

Credit risk The Company has contracts with Public Administration, a situation that does not present insolvency

problems, but which requires constant contact with customers in order to minimise delays caused by the

Authority’s red-‐tape and jointly resolve problems relating to their financial management.

There are no significant credit concentration risks to report, which are carefully monitored by the

Company. Furthermore, given the continuing economic downturn, the Company has equipped itself with

specific procedures and structures aimed at a more efficient management of its working capital, as well as

of debt collection.

Fair value The Company’s financial instruments recorded in the financial statements do not deviate from fair value,

including those classified as assets held for disposal, given that all are at a variable interest rate,

short/medium-‐term and at market interest rates.

The comparison between the carrying amount and fair value of the main financial assets and liabilities is

shown below:

Carrying Amount Fair value

31-‐Dec-‐14 31-‐Dec-‐13 31-‐Dec-‐14 31-‐Dec-‐13

Financial assets Cash and cash equivalents 92,641 149,834 92,641 149,834 Receivables and other current financial assets 38,129 96,535 38,129 96,535 Other minority interests 2,718 2,504 2,718 2,504 Non-‐current financial receivables 66,964 59,568 66,964 59,568 Financial liabilities Loans: -‐ Variable rate loans 30,251 87,881 30,251 94,593 -‐ Fixed rate loans 370,280 413,116 370,280 413116 Other current financial liabilities 14,160 20,484 14,160 35,245 Financial liabilities for non-‐current derivatives 0 0 0 0


Interest rate risk The Company’s current policy has a preference, for the management of financial charges, for fixed rate

loans, through the possession of a portion relating to the bond described in previous paragraphs.

The financial instruments of the Company exposed to interest rate risk are those recorded under the

following balance sheet items:

› Loans and other financial liabilities (note 19).

› Non-‐current financial assets (note 9).

› Receivables and other current financial assets (note 14).

› Cash and cash equivalents (note 15).

As at the balance sheet date the Company had no derivative transactions in place, to cover interest rate

risks.

Interest rate sensitivity analysis

The following table shows the sensitivity of pre-‐tax profit in the period, as a result of reasonably possible

changes in interest rates, maintaining all other variables constant.

Increase/decrease Effect on profit before taxes (in thousands of Euro)

Financial year ended 31 December 2014 +150 bps 201 -‐30 bps (40)

Financial year ended 31 December 2013 +150 bps (1.608) -‐30 bps 322

The new structure of the debt, as we have seen, is affected, to a very marginal extent, by the changes in

market rates, as the Company has set the cost for its recourse to credit market at the rate of return it

ensures on the bond coupons.

On the contrary, in the previous year, the profit recorded the cost of the bond issue proceeds for a part of

the year only. The table below shows the sensitivity of the pre-‐tax profit in 2013 should the bond issue

dated 2 August have ensured proceeds since 1 January 2013:

Separate Financial Statements Pro-‐forma Separate Financial Statements

Net financial charges

Profit before taxes

Net financial charges

Profit before taxes

Financial year ended 31 December 2013 (23,975) 22,779 (35,125) 11,630


Exchange rate risk The Company operates in the national market and, therefore, it is not exposed to exchange rate risk.

Capital management The key objective of the Company’s capital management is to guarantee that a solid credit rating is

maintained as well as adequate capital ratios to support operations and to maximise value for

shareholders. The Company manages the capital structure and amends it on the basis of changes in

economic conditions. In order to maintain or adjust the capital structure, the Company can adjust the

dividends paid to shareholders, repay principal or issue new shares.

The Company checks its debt ratio, by assessing the ratio of net debt to the total of own equity and net

debt. The Company includes, in net debt, interest-‐bearing loans, trade payables, other payables and

provisions for employee severance indemnity, net of cash and cash equivalents

(in thousands of Euro) 31.12.2014 31.12.2013

Employee termination indemnity 12,353 14,162 Interest-‐bearing loans 414,691 535,495 Trade payables and other payables 376,553 453,629 Cash and cash equivalents (92,641) (149,834) Net Debt 710,955 853,451 Capital 109,149 109,149 Reserves and retained earnings 232,110 220,941 Total capital 341,259 330,090 Equity and net debt 1,052,215 1,183,541 INDEBTEDNESS RATIO 68% 72%

A 4% change was recorded in the debt ratio compared to 31 December 2013, which was mainly due to a

reduction of € 121 million in net debt compared to a limited capital increase of € 11 million.

39. SUBSEQUENT EVENTS TO THE CLOSE OF THE YEAR

No significant events are reported which occurred after the year-‐end.

The Chairman of the Management Board

Claudio Levorato

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